Asia’s middle distillates markets continued to see margin declines, against a backdrop of slightly thinner spot liquidity in the open window though more refiners did start off their August spot offers.
Taiwan’s CPC Corp kicked off its spot August selling activity by making one cargo available, while several traders say South Korea-based refiners should also start offering.
Refining margins closed the trading session at around $16 a barrel.
Declines in spot cash discounts slowed down slightly, recovering to a discount of 25 cents at the close of the market, given the narrower contango paper market structure. However, deals were still being done at discounts of 20 cents a barrel.
Traders turned slightly bearish on the jet fuel front, as evidenced by the largest discount levels discussed for August shipments.
Concerns were mostly about the shaky arbitrage price spreads between Asia and northwest Europe. For traders to consider targetting buyers in the West, discounts would have to steepen further, one source said.
Shipping enquiries, however, still emerged on the China-northwest Europe route for jet fuel in the afternoon.
Regrade, however, continued to narrow for a third straight session to a discount of 90 cents a barrel.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deal.
INVENTORIES
– U.S. crude oil and gasoline inventories fell last week while distillates rose, according to market sources citing American Petroleum Institute figures on Tuesday.
– Middle distillates inventories held at Fujairah Oil Industry Zone gained by nearly 500,000 barrels to hit a five-week high of 3.156 million barrels in the week to July 8, , according to industry information service S&P Global Commodity Insights. FUJAIRAH/
NEWS
– Global oil demand will outpace supply next year, the U.S. Energy Information Administration said on Tuesday, reversing a prior forecast for a surplus.
– Nigeria’s NNPC is in talks for another oil-backed loan to boost its finances and allow investment in its business, its chief executive told Reuters, as pressure mounts on the state-backed oil company the economy depends upon.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)