Asia’s middle distillates markets kicked off the week softer by almost 6%, with spot activity picking up against a backdrop of stronger crude futures and weakness in the gasoil swaps market, with spot premiums hitting a near four-month low.
Cautious expectations on China’s exports for November-loading also weighed, with a portion of the market still expecting majors to sell more exports on profitable margins.
Spot cash premiums for 10 ppm sulphur gasoil weakened further to $1.21 a barrel as the November-December backwardated price structure eased slightly, with more sellers clearing their prompt November lots.
Premiums for 500ppm sulphur gasoil fell as well, reflecting the persistently strong selling interest since a week earlier and slightly slower demand for the former. The spread between cash premiums for 500ppm sulphur and 10ppm sulphur gasoil remained at above $4.20 a barrel.
Refining margins for 10ppm sulphur gasoil slipped by more than $1 a barrel as a result.
Jet fuel refining margins also declined, in line with gasoil cracks, but at a slower pace as expectations of heating oil demand ahead of winter were firm.
Regrade inclined further to more than a one-month high.
SINGAPORE CASH DEALS
– One 10ppm sulphur gasoil deal, one 500 ppm sulphur gasoil deal, no jet fuel deals.
NEWS
– Top oil exporters Saudi Arabia and Russia confirmed on Sunday they would continue with their additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to weigh on crude markets.
– Oil prices edged up on Monday as top exporters Saudi Arabia and Russia said they would stick to extra voluntary oil output cuts until the end of the year, keeping supply tight, while investors watched out for tougher U.S. sanctions on Iranian oil. O/R
– China’s oil refinery utilisation rates are easing from record third-quarter levels as thinning margins and a shortage of export quotas discourage plants from raising output for the rest of 2023, according to traders and industry consultancies.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)