Asia’s middle distillates markets softened slightly week on week as August spot discussions ticked up and physical cargoes continued to be sold at discounts, reflecting the cautious demand-supply outlooks.
Refiners continued to let go of July and August loading cargoes at discounts of $1-2 a barrel, similar to discussion levels three weeks ago, signaling that supplies were still sufficient within the region.
Arbitrage economics for traders remained shaky through the week, though some shipping enquiries did emerge from northeast Asia to northwest Europe for diesel.
More discussions are likely to emerge from next week, with at least three key refiners starting to offer their August spot cargoes for various grades of gasoil and jet fuel.
On the demand front, traders remained on the fence as some refineries that were earlier shut from scheduled maintenance or outages are scheduled to return by the end-July to August period.
Refining margins closed the week lower by slightly more than 10 cents a barrel to around $17.30 a barrel, reversing gains since the start of the week.
Spot discounts declined further for a third consecutive week to 26 cents a barrel, despite recovering from a three-month low in the previous session, amid strong prompt selling interest and overall buyer unwillingness to pay up.
In jet fuel markets, deals in the open trading window were recorded for the third time this week — in discounts no less, reflecting the contango market structure and overall sufficient prompt supply available.
Capping market weakness were talks of east-west arbitrage activity, with one long-range vessel carrying around 90,000 tons of jet fuel loading from South Korea scheduled to be bound for northwest Europe.
Regrade narrowed slightly to around $1 a barrel week on week, but the spot market discussions remained in discounts.
SINGAPORE CASH DEALS
– No gasoil deal, one jet fuel deal
INVENTORIES
– Gasoil stocks were marginally lower at 2.18 million tons as imports slowed while rising prices hit buying interest.
– Russia’s oil producers Rosneft and Lukoil will sharply cut oil exports from the Black Sea port of Novorossiisk in July, two sources familiar with a loading plan said, as the companies resumed operations at their refineries.
– Top oil exporter Saudi Arabia has cut the price for the flagship Arab light crude it sells to Asia in August to $1.80 a barrel above the Oman/Dubai average, Saudi Aramco said in a statement on Thursday.
– Shell will take an impairment charge of up to $2 billion after the sale of its Singapore refinery and pausing of construction of one of Europe’s largest biofuel plants, it said on Friday.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)