Asia’s middle distillates markets weakened for a second session on Tuesday as traders mulled October exports from China, Russia’s fuel ban, and weaker cracks performance in northwest Europe, despite an opened east-west arbitrage for jet fuel.
Refining margins for 10 ppm sulphur gasoil slipped to a one-week low of $28.88 a barrel, reflecting weakness in gasoil futures amid an ongoing sell-off as the effect of the Russian ban was wearing off further.
Spot premiums for October shipments likewise fell by 26 cents against a backdrop of prompt first-half October selling interest in the open trading market.
Jet fuel demand stayed robust, with more shipments bound for the U.S. West Coast next week from South Korea because of the east-west arbitrage of more than $30 a barrel.
Up to 40,000 metric tons of the fuel will be loaded from Yeosu port this weekend bound for the U.S. PADD-5 region.
Overall market gains were capped as prompt supplies remained readily available from Asian refiners – with talks of South Korea’s SK Energy offering more jet fuel for mid-October loading.
Cracking margins were dragged by weaker gasoil performance as well, closing the session at almost $26 a barrel. The regrade discount narrowed back to around $2.70 a barrel as a result.
SINGAPORE CASH DEALS
– No deals for both jet fuel or gasoil.
INVENTORIES
– Analysts in a Reuters poll estimated stockpiles of gasoline USOILG=ECI were down by about 100,000 barrels last week, while distillate stockpiles, which include diesel and heating oil, were seen down by about 2 million barrels.
NEWS
– Oil prices fell on Tuesday amid concerns that fuel demand will be crimped by major central banks holding interest rates higher for longer, even with supply expected to be tight.
– Poland’s Unimot UNTP.WA has emerged as one of the possible buyers of a 37.5% stake oil major Shell owns in Germany’s PCK Schwedt refinery, two people familiar with the matter said.
– The cost of chartering a supertanker to load Middle Eastern crude oil for Asia rebounded from a 19-month low in September, but industry sources expect output supply cuts, led by Saudi Arabia, to cap freight rates for the rest of the year.
Source: Reuters (Reporting by Trixie Yap; Editing by Varun H K)