Asia’s middle distillates markets remained in thin trade on Wednesday, with a lack of deals in the open trading window persisting for a second trading session, though prices and margins were both firmer amid the strength in prompt ICE gasoil futures.
Talk of some shorter supplies in several west of Suez markets could have been the key supportive factor recently, some analysts said.
The July-August paper market structure switched back into a backwardation with July prices were propped up higher than August prices, signalling strength in the earlier loading month.
Meanwhile, on the regional physical cargo front, a second round of July offers emerged from some South Korean oil majors. Taiwan’s CPC Corp also started their July offers.
Refining margins clawed back some losses from the previous session, gaining by 70 cents a barrel.
Spot market differentials firmed as a result of the strength in the paper markets, though buying interest stayed minimal throughout the day.
Selling interest was robust, as evidenced from the numerous offers in the market – presumably since it would be better to sell prompt cargoes given the economical incentive.
Meanwhile, more jet fuel spot offers surfaced from northeast Asian refiners for July, in line with earlier expectations, but discussions are likely to remain in discounts of nearly $2 a barrel because of the persistently high freight costs.
The need for traders to ship some cargoes out of the region could also be the reason for the larger discounts, one key refinery source said.
Regrade discounts were little changed at $1.30 a barrel, reflecting the sufficient supplies.
SINGAPORE CASH DEALS
– No deals for gasoil and jet fuel.
INVENTORIES
– U.S. crude oil and distillate inventories rose last week while gasoline fell, according to market sources citing American Petroleum Institute figures on Tuesday.
– Middle distillates stocks at Fujairah Industry Zone were at a near three-month low of 3.058 million barrels in the week to June 17, according to industry information service S&P Global Commodity Insights.
REFINERY NEWS REF
– Exxon Mobil Corp’s XOM.N 610,000 barrels-per-day (bpd) refinery in Beaumont, Texas, experienced issues due to loss of steam at a crude unit on Tuesday, research company IIR Energy said.
– A blaze at an oil depot in the town of Azov in Russia’s southern region of Rostov has been raging for more than 24 hours, local emergency services said on Wednesday.
– Russian oil producer Lukoil has shipped 366,000 barrels, or some 50,000 metric tons of diesel, to Chile’s port of Arica from the Baltic Sea’s port of Vysotsk earlier this month, Kommersant daily reported, citing data from Kpler.
– U.S. retail sales barely rose in May and data for the prior month was revised considerably lower, suggesting that economic activity remained lackluster in the second quarter.
Source: Reuters