Asia’s middle distillates markets picked up trading pace on Wednesday as more July spot refiner offers emerged and window activity remained upbeat, with one western trading house continuing to scoop up cargoes on the window.
More July spot offers emerged in line with traders’ earlier expectations, with both Taiwan’s FPCC and South Korea’s GS Caltex in the market.
Offers from a handful of China majors should also emerge in the next few days, one buyer said.
Spot sales have been gaining momentum since last month as most refiners return from their scheduled refinery maintenance，against a backdrop of healthy refining margins, multiple trade sources said, adding that refiners are probably going to maximise their profits now.
Meanwhile, for jet fuel front, some concerns on demand erosion in Asia emerged as Australia’s Qantas Airways QAN plans to close its Singapore-based budget airline Jetstar Asia in end-July.
Some analysts estimate the decline in jet fuel demand from the airline’s closure to be below 2,000 barrels per day, pending rivals who may take over some flight routes.
Refining margins (GO10SGCKMc1) declined further to close at around $15.5 a barrel
On the trading window, BP continued to buy front-month deliveries at premiums, with the trading house’s purchases totalling at 480,000 barrels this week and 1.13 million barrels for June so far.
Cash differentials (GO10-SIN-DIF), however, still fell, given the narrower backwardated derivatives market structure. Jet fuel cash markets also came under pressure with lower offers in sight.
Regrade (JETREG10SGMc1) widened to around discounts of $1.30 per barrel, reflecting the weaker jet fuel markets.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deal
INVENTORIES
– U.S. crude stocks fell last week while gasoline and distillate inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
– Middle distillates stocks held at Fujairah Oil Industry Zone climbed for the first time in a month, with levels hitting 787,000 barrels for the week ended June 9, according to industry information service S&P Global Commodity Insights.
NEWS
– The European Commission proposed on Tuesday an 18th package of sanctions against Russia for its invasion of Ukraine, aimed at Moscow’s energy revenues, its banks and its military industry. The Commission has also proposed a ban on imports of refined products produced from Russian oil.
– Oil prices edged up towards a seven-week high on Wednesday as markets assessed the outcome of U.S.-China trade talks, yet to be reviewed by U.S. President Donald Trump.
– Oil demand growth will remain robust over the next two and a half decades as the world population grows, OPEC Secretary General Haitham Al Ghais said on Tuesday.
Source: Reuters