Asia’s middle distillates markets recorded an uptick in overall open trading window activity, with traders starting to look towards China-origin exports for July parcels.

Markets were awaiting a direction on China-origin exports for July since it could tilt the current demand-supply balance, with some traders expecting volumes to be around 500,000-600,000 metric tons for now – pending more refinery sales amid improving export margins.

The lack of clarity on China’s crude runs for July clouded a market outlook as well, though some traders firmly expect levels to be stable from June given high inventories of some products.

Refining margins for the transport and industrial fuel closed the trading session at almost $17.50 a barrel.

Spot cash differentials, however, slipped into smaller premiums despite the wider backwardation in July and August prices, given the lower-priced selling interest in the open trading window.

Meanwhile, traders are still expecting ample jet fuel supplies from China for July, likewise June, given the strong export margins for refiners and healthy aviation bunkering demand.

Talks of China majors trying to increase jet fuel yields from their refinery output for July were also in the market.

Regrade widened further to around $1.38 a barrel as a reflection of the stronger gasoil performance.

SINGAPORE CASH DEALS

– One 10ppm gasoil deal, no jet fuel deal.

INVENTORIES

– Singapore’s middle distillates stockpiles declined for a third straight week, though net exports of most fuels dipped week-on-week and total gasoil imports rose by more than 70%, official data showed on Thursday.

NEWS

– China’s fuel oil imports cooled in May after hitting multi-year highs in April, data showed on Thursday.

– Brent oil futures were little changed in Asia on Thursday, hovering slightly below seven-week highs, as the market weighed geopolitical developments in the Middle East while waiting for U.S. inventory data.
Source: Reuters (Reporting by Trixie Yap; Editing by Maju Samuel)