Asia’s middle distillates markets extended losses, continuing on its downward trajectory for a second straight session against a backdrop of profit-taking and declines in derivatives market structure.
Physical discussion levels remained rangebound given the limited fluctuations in regional supply-demand fundamentals even up till July, though ICE gasoil prices dipped by almost 10% from the previous trading session.
Meanwhile, some expectations of possibly lower China’s export barrels for July resurfaced, given the decline in refining margins outside of China, which could end up squeezing export sales margins for the oil majors.
Spot offers from China started to be more prevalent after bated breaths, with some regular export sellers starting off their July sales activity.
For the jet fuel arbitrage, the east-west spreads took a dip and went back south, closing the window for sellers to engage in further discussions on this trade route for the time being.
Refining margins slipped for a second straight session this week to below $17.8 a barrel, erasing most of last week’s gains.
On the trading window, activity was mostly muted, given the dip in July/August timespreads to around 80 cents a barrel and a consistent buy-sell gap.
The 10ppm sulphur gasoil cash differentials declined to nearly $1 a barrel, while jet fuel cash differentials went back to slight discounts.
Regrade narrowed slightly from the previous trading session to discounts of around $1.6 a barrel.
SINGAPORE CASH DEALS
– No deals for both fuels
INVENTORIES
– U.S. crude oil stockpiles were expected to have fallen, while gasoline supplies were seen as unchanged and distillate stocks likely rose last week, a preliminary Reuters poll showed on Monday.
REFINERY NEWS
– Venezuela’s second-largest refinery, the 310,000-barrel-per-day Cardon plant operated by state company PDVSA, remained halted on Monday after a power blackout, three sources with knowledge of its operations said.
– Russia’s largest oil producer Rosneft will suspend output of its export-oriented Sokol crude grade at its far eastern Sakhalin-1 project in August because of maintenance, three industry sources told Reuters.
NEWS
– Oil prices tumbled on Tuesday to their lowest level in more than a week as U.S. President Donald Trump said a ceasefire has been agreed between Iran and Israel, relieving worries of supply disruption in the area.
– U.S. and Israeli attacks on Iran and Tehran’s reprisals have doubled the price of insuring shipments to the Middle East and the Gulf in the last week, insurance sources said on Monday.
Source: Reuters