Asia’s middle distillates markets saw more activity both on the spot tender and paper swaps fronts, but overall price movements were limited and discussions were still moving within the $1-per-barrel range.
Like last week, China-origin gasoil remained discussed at deep discounts as freight costs continued to eat into seller profits in the near term.
At least one February loading cargo was sold by one China oil major at discounts nearing $3 a barrel, two sources said.
Paper swap discussions in the market were slightly more active and upbeat, especially for March, but sellers were aplenty, pressurising the February/March spread into a deeper backwardation.
Refining margins GO10SGCKMc1 for the transport and industrial fuel closed the trading session almost unchanged at slightly above $25 a barrel.
Spot market premiums GO10-SIN-DIF slipped even further below $2 a barrel owing to lower-priced offers from Trafigura in the open trading market and a lack of higher-priced buyers. The market remained in a stand-off for a fourth straight session, as evidenced by the lack of deals.
More spot jet fuel cargoes emerged from China for February loading, in line with earlier expectations, despite a lack of market activity in the open trading window.
Regrade JETREG10SGMc1 closed the session largely unchanged at a discount of $2.70 a barrel, a reflection of the supply length in the market. There were firm expectations of the spread remaining wide going into the rest of February, analysts say.
“Increasingly warmer weather conditions in Japan, coupled with the anticipation of substantial Chinese jet exports in February, suggests that the Singapore regrade is likely to maintain its current width, if not widen further,” said Sparta Commodities’ analyst James Noel-Beswick.
SINGAPORE CASH DEALS O/AS
– No deals for gasoil or jet fuel.
INVENTORIES
– U.S. distillate stockpiles USOILD=ECI, which include diesel and heating oil, fell by 2.5 million barrels in the week to 130.7 million barrels. That compared with expectations for a 0.4 million-barrel drop, EIA data showed.
– Singapore’s middle distillates stock levels posted gains for a second consecutive week as the decline in jet fuel/kerosene net exports outweighed increments in diesel/gasoil net exports, official data showed.
NEWS
– OPEC oil output in January registered the biggest monthly drop since July, a Reuters survey found, as several members implemented new voluntary production cuts agreed with the wider OPEC+ alliance and unrest curbed Libyan output.
– Russia’s exports of ultra low-sulphur diesel (ULSD) from the Baltic Sea port of Primorsk are set to fall by 3.5% month on month to 1.86 million metric tons in February, from the 2.06 million tons scheduled for January, two traders said on Wednesday.
Source: Reuters (Reporting by Trixie Yap; Editing by Savio D’Souza)