Asia’s middle distillates market activity on the trading window turned upbeat, with a spot deal emerging for the first time in almost two weeks, against a backdrop of firmer paper markets and robust trading sentiment in the West.
Spot August offers emerged from Taiwan’s Formosa Petrochemical Corp for gasoil and jet fuel, in line with earlier market expectations.
Some production issues at a gasoline-producing unit in Talin refinery will likely curtail spot availability from Taiwan’s CPC Corp, some trade sources said.
Meanwhile, the front-month east-west arbitrage widened further to around discounts of $51 a barrel – gaining back to same levels during the Iran-Israel conflict in second-half June.
Firm trading sentiment in the ICE gasoil markets remained a key driver, given some front-month July buying ahead of contract expiry next week, as Asian market fundamentals remain little changed, a handful of trade sources said.
Refining margins held steady from the previous trading session at slightly above $20 a barrel,
“The light crude slates and lack of resid at the moment appears to be hampering global diesel production,” said Sparta Commodities analyst James Noel-Beswick in a client note.
A physical deal done on the trading window supported cash differentials (GO10-SIN-DIF), with premiums gaining to $1.36 a barrel.
Jet fuel markets were supported by a wider arbitrage price spread with the U.S. west coast markets, though some traders remained cautious on the weaker paper markets in Europe.
Regrade (JETREG10SGMc1) widened slightly to discounts of $1.75 a barrel.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deal
INVENTORIES
– Singapore’s middle distillates inventories fell below 10 million barrels for the first time in a month, extending losses for a second week despite softer overall net exports week on week, official data showed on Thursday.
– U.S. crude oil and gasoline inventories rose unexpectedly last week as both exports and demand fell sharply, the Energy Information Administration (EIA) said on Wednesday.
NEWS
– Russia’s seaborne diesel and gasoil exports fell in June by 6% on a monthly basis to about 3.35 million tons as production volumes fell due to refinery maintenance, according to LSEG shipping data and market sources.
– Abu Dhabi National Oil Company (ADNOC) has restored most of the Murban crude oil supply going to equity holders in July after making a sharp cut earlier, multiple trade sources said on Thursday.
– The provincial government of Shandong, China’s refining hub, has increased fuel oil import tax rebates for six independent refineries to improve their profitability as they struggle with low margins and fuel demand, industry sources said this week.
Source: Reuters