Asia’s middle distillates market went back on a downtrend as ICE gasoil prices turned volatile in thin trading activity, against the backdrop of strong selling interest in the paper market amid further expectations of easing tight supplies in the near term.
A sell-off in the swaps market weighed on prompt October paper prices, in line with earlier market expectations, as the tight supply situation is slated to improve gradually after Russia lifted export bans partially.
Refining margins for 10 ppm sulphur gasoil were slightly below $25 a barrel as a result.
Spot cash premiums for the fuel closed the trading session at a near two-month low at $1.89 a barrel.
Prompt demand for end-October parcels capped any weakness in the physical markets, as some traders were still slightly bullish on fundamentals in the West entering the year-end heating demand season. This was evident from the rebound in east-west arbitrage spreads to a one-week high of close to minus $70 a ton.
Likewise, jet fuel refining margins fell and overall trading activity remained muted despite an opened arbitrage window to the U.S. West Coast. Slightly slow demand from the West, due to weather related reasons, could have been the key reason for limited market activity, a source said.
Regrade remained almost steady at a discount of around $2.20 a barrel, with various swap sellers in the market at this level.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deal.
INVENTORIES
– Analysts in a Reuters poll estimated stockpiles of gasoline USOILG=ECI were down by about 1.9 million barrels last week, while distillate stockpiles, which include diesel and heating oil, were seen decreasing by about 1.4 million barrels.
REFINERY NEWS REF/OUT
– Indian Oil plans to shut its 6 million metric tons per year crude unit and some secondary units at its Panipat refinery for 30-45 days starting November, a company source said. The company, however, may delay maintenance plans depending on local fuel demand, the source added.
NEWS
– Saudi Aramco has notified at least four North Asian buyers that it will supply full contractual volumes of crude oil in November, sources with knowledge of the matter said on Tuesday, as the Kingdom maintained its output policy.
– Oil prices eased on Tuesday after rallying more than 4% in the previous session, with traders cautious as they watched for potential supply disruptions amid military clashes between Israel and the Palestinian Islamist group Hamas.
– Mexican state-owned oil company Pemex expects to process 1.16 million barrels of crude oil per day by the end of 2023, CEO Octavio Romero said on Monday.
– Russian wholesale diesel prices continued to increase on Tuesday after Moscow mostly lifted an export ban on the fuel last week, while prices of gasoline, exports of which are still prohibited, fell for the second day in a row.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)