Asia’s middle distillates markets slipped for the first time in three weeks on Friday, amid slightly thinner spot trading liquidity in the open trading market towards the end of the week and overall uncertainty on Red Sea shipping issues.

Cracks and prices both surged earlier in the week following more attacks on vessels in the Red Sea, but the excitement gradually slowed down late week.

“Although recent market movements have indicated a bullish sentiment for European and global gasoil markets, this week’s shifts appear to be largely influenced by speculative rumours about the Red Sea issues. This speculation-led increase is likely to dissipate in the short term with moves in cracks and spreads following,” said Sparta Commodities analyst James Noel-Beswick.

On the spot tenders front, however, refiners were readily offering their January cargoes ahead of the holiday season, with deals still mostly done at discounts between 50 cents and $1.30 per barrel depending on the loading time.

Uncertainty over China’s January export volumes, with some traders expecting them to be higher than December, weighed further on the markets.

Regional demand was described as thin from some market participants, as evidenced from the continuous discussions in discount territory – apart from premiums in the open trading market which is following the backwardated market structure for January and February paper swaps.

Spot premiums GO10-SIN-DIF slipped by around 15% week on week to around 38 cents per barrel, reflecting the slightly narrower backwardation in the market and consistently lower-priced offers in the past few tading sessions.

Refining margins GO10SGCKMc1 fell by close to 2% week on week.

The jet fuel market was slightly driven by some demand from northeast Asia for winter heating purposes, despite a lack of activity from the arbitrage export front for the third consecutive week. However a lack of spot liquidity also capped market movements overall.

Regrade JETREG10SGMc1 ultimately ended the week softer, as some trade sources mentioning that the spread has been overly supported the past two weeks despite a lack of overall jet fuel open trading activity.

Global flight volumes were mostly unchanged week on week, according to Citi analysts in a client report.
Source: Reuters (Reporting by Trixie Yap; Editing by Rashmi Aich)