Asia’s middle distillates markets were buoyed by firmer ICE gasoil futures performance, near term tighter supply expectations in the West – with margins hitting more than a two-month high – though regional activity remained muted.
Trading activity was bolstered by more than 2% gains in ICE gasoil futures towards the close of the market, as refinery troubles persisted in the West – along with a string of possible refinery shutdowns from worker strikes in France.
Refining margins surged to a slightly more than a two-month high of nearly $17.8 a barrel.
Meanwhile, regionally, there was still an emergence of offers from China’s oil majors for July gasoil and jet fuel, in line with earlier expectations, but discussions remained in discounts of more than $1 a barrel.
Cash differentials however gained only 2 cents a barrel as evidenced from the persistent buy-sell gap, and the market recorded much fewer sellers in comparison with the past three trading sessions.
Regrade was little changed at discounts of $1.50 a barrel, but some traders are expecting support from the West to emerge as well given the gains there in the past few sessions.
The arbitrage price difference may widen soon if West prices stay firm, one refinery source said.
SINGAPORE CASH DEALS
– No deals for both gasoil and jet fuel.
INVENTORIES
– U.S. crude and gasoline inventories rose as demand softened, while distillate stockpiles fell last week, the Energy Information Administration said on Wednesday.
– Singapore’s middle distillates stockpiles were little changed from a week earlier as gains in net exports of diesel/gasoil were offset by the declines in jet fuel/kerosene, official data showed on Thursday.
REFINERY NEWS
– U.S. oil refiners are expected to have about 164,000 barrels per day (bpd) of capacity offline in the week ending June 28, decreasing available refining capacity by 11,000 bpd, research company IIR Energy said on Wednesday.
NEWS
– China’s industrial profits rose at a sharply slower pace in May, official data showed on Thursday, underlining the struggles faced by the world’s second-largest economy as weak domestic demand crimps overall growth.
– China’s manufacturing activity likely contracted for a second month in June, a Reuters poll showed on Thursday, keeping alive calls for fresh stimulus after a string of recent indicators showed the economy struggling to get back on its feet.
– India’s state-run Bharat Petroleum Corp does not see any major change in its annual crude processing this fiscal year, as it plans to shut a crude unit at its biggest refinery for a month for maintenance, an executive said on Thursday.
Source: Reuters (Reporting by Trixie Yap; Editing by Vijay Kishore)