Asia’s middle distillates markets went on an upward trajectory for a fourth straight session as geopolitical tensions in the Middle East simmered that contributed to higher freight costs, and upbeat July discussions.
Higher freight cost considerations for Middle East-loading cargoes were evident in the market, with shipowners raising their offers as conflict in that region continued to raise war risk premiums.
Front month paper markets were well supported amid the almost 5% gains in ICE gasoil futures during the afternoon trading session, with the market’s structure turning more backwardated.
Fundamentals overall were little changed regionally with July spot availability possibly increasing, compared with June, given the strong refining margins.
China exports are expected to surge to almost 1 million metric tons in July, several traders said, while South Korea-loading barrels for mid-July were discussed at discounts of 20-50 cents per barrel.
Meanwhile, the east-west price spread for July (LGOAEFSMc1) gained to almost $45 per metric ton, its highest since early February this year.
Refining margins (GO10SGCKMc1) extended gains for a third straight session to slightly more than $21 per barrel.
On the trading window, higher-priced deals continued to dominate discussions and the 10ppm sulphur gasoil cash differentials (GO10-SIN-DIF) rose to its highest since February last year of around $1.3 per barrel.
Regrade (JETREG10SGMc1) was at its widest in five-months of nearly $1.8 a barrel, given the firmness in gasoil markets in comparison.
Meanwhile for June, there could be up to 4 million barrels of jet fuel loading from Asia to Europe markets, Reuters calculations showed.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deal
INVENTORIES
– Singapore’s middle distillates stockpiles surged to their highest level since end-February to more than 11 million barrels, as net exports of jet fuel dipped week-on-week, official data showed on Thursday.
– U.S. crude oil stockpiles fell sharply last week, posting their largest decline in a year, while gasoline and distillate inventories rose, the Energy Information Administration said on Wednesday.
NEWS
– Oil prices rose on Thursday after Israel and Iran continued to exchange missile attacks overnight and U.S. President Donald Trump’s stance on the conflict kept investors on edge.
– Commercial ships are sailing close to Oman and are being advised by maritime agencies to avoid Iran’s waters around the Strait of Hormuz, with the risk of the conflict between Israel and Iran escalating, shipping sources said on Wednesday.
Source: Reuters