Asia’s middle distillates markets declined for the second straight week, hovering at one-year lows, as bearish fundamentals continued to be in focus despite analysts expecting the market to have already bottomed out.
Spot availability remained abundant for June, as evidenced by the offers in the market throughout the week and discussions remained at discounts.
On the buying front, some prompt demand from the west, specifically Mexico’s Pacific coast, emerged, sources said, adding that it was due to some lower runs there.
Around 35,000 metric tons of gasoil was fixed loading from north China to Mexico now, a shipbroker source said.
“The Singapore diesel market presents a complex outlook. Whilst turnaround activity in the region is decreasing, reduced crude runs and exports from India, China, and Russia add layers of uncertainty,” said Sparta Commodities’ James Noel-Beswick in a client note.
“Despite these conflicting elements, the overall perspective remains neutral to bullish. Taking into account the ongoing reductions in exports and the shifting arbitrage dynamics, we foresee potential stability or improvement in Singapore diesel pricing moving forward.”
Refining margins GO10SGCKMc1 for the fuel remained slightly below $14 a barrel.
Spot cash discussion levels GO10-SIN-DIF stayed in the discounted zone given the availability of lower-priced sellers sporadically in the past few trading sessions.
Activity was thin on Friday, with only one bid and one offer in the spot trading window.
More clarity is expected from China refiners on their June export plans soon, one source said.
For jet fuel, South Korea’s oil majors have sold around 7-8 spot cargoes for June, Reuters records showed, little changed from May.
Demand side, near-term support will likely come from regional importers replenishing their stocks because of some planned maintenance.
Bullish expectations also buoyed jet fuel markets this week, with regrade JETREG10SGMc1 gaining slightly to around a discount of $1.50 a barrel.
SINGAPORE CASH DEALS O/AS
– No deals for both fuels.
INVENTORIES
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell by 2% during the week to Thursday, data from Dutch consultancy Insights Global showed.
NEWS
– Oil prices were stable on Friday as investors considered the latest comments from the U.S. Federal Reserve on interest rates amid sticky inflation, while signs of firming seasonal U.S. fuel demand lent support.
– The Belgian government plans to publish a royal decree that tightens the quality of motor fuel exports within days, with the new regulations expected to take effect after three months, the energy ministry said.
– Russia, in a rare admission of oil overproduction, said overnight that it exceeded its OPEC+ production quota in April for “technical reasons”, a surprise move that analysts and industry sources say shows Moscow faces challenges in curbing output.
– The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, will meet virtually on June 2, OPEC said on Friday.
Source: Reuters (Reporting by Trixie Yap; Editing by Janane Venkatraman)