Asia’s middle distillates markets recorded little trade action on the open window, though prices slipped, with some refiner sales for February spot still underway and traders still assessing the possible impact of tradeflow changes following sanction actions.
Refiner sale price levels ticked, with recent February spot cargoes sold at premiums above 30 cents per barrel, reflecting the wider market backwardation and worries about slightly tightening supplies.
Markets are factoring in the possibility of swing suppliers looking towards west soon if the east-west arbitrage spreads widen further, trade sources said, with one source adding that the jet fuel arbitrage is mildly open.
The gasoil exchange of futures for swaps (EFS) price spread, which typically shows a rough east-west difference, jumped in the previous session and hovered at more than one-month highs of around $30 a ton.
Refining margins (GO10SGCKMc1) closed the trading session lower at below $16 a barrel, reversing most of earlier gains as traders took profit.
Talks of refining run cuts resurfaced, especially in northeast Asia, given that complex refining margins were going back south – dipping to a five-month low of around $1.80 a barrel.
Spot differentials (GO10-SIN-DIF) reversed all of the previous session’s gains, slipping back to around 90 cents a barrel, as competitively-priced offers were prevalent for February.
Regrade (JETREG10SGMc1) regained some strength to close at discounts of less than $2 a barrel, as gasoil swaps weakened slightly.
SINGAPORE CASH DEALS
– No deals for both fuels
INVENTORIES
– U.S. crude oil and distillate stockpiles are expected to have fallen last week and gasoline inventories to have risen, a preliminary Reuters poll showed on Monday.
NEWS
– Supertanker freight rates jumped after the U.S. expanded sanctions on Russian oil trade and sent traders rushing to book ships to pick up supply from other countries to go to China and India, shipbrokers and traders said.
– The average number of vessels that passed through the Panama Canal in December increased to 34.2 per day, according to a notice from its authority seen on Monday, but the waterway did not fill all the slots on offer, a sign that some ships continue taking alternative routes.
– BP BP.L warned on Tuesday that lower production, weak refining margins and sluggish trading would see its profit in the fourth quarter of 2024 fall from the previous three months.
Source: Reuters