Asia’s middle distillates markets recorded an uptick in physical trading activity and slightly upbeat paper discussions, with lower offers weighing on cash markets though margins barely moved from the previous trading session as mixed outlooks for July persisted.

A key refiner in South Korea cancelled its tender to sell July loading cargoes despite just offering the cargo a day earlier, likely due to the lower spot discounts in the market.

The market is expected to lengthen in the near term because of some supplies returning after the maintenance season in July and August, some analysts’ expectations showed.

Some regional buying interest due to prolonged refinery shutdowns, however, should limit overall market weakness. Pertamina emerged from the sidelines for 1.5 million barrels of gasoil for July delivery, in addition to the 1 million barrels they were looking for last week.

Refining margins recovered slightly but were barely at $16.20 a barrel, reflecting the rebound in paper and ICE gasoil markets.

Spot market differentials sank back into discounts as lower-priced offers emerged for second-half July loading, a reflection of a portion of the market remaining bearish on fundamentals.

Jet fuel markets were weighed on by a closed arbitrage price difference between Asia and northwest Europe, though a slightly wider arbitrage between Asia and the U.S. West Cost proved encouraging.

Regrade continued its downward trajectory by falling 2 cents from the previous trading session, despite some regional buying interest as well.

SINGAPORE CASH DEALS

– One 10ppm gasoil deal, no jet fuel deal

INVENTORIES

– U.S. crude oil and gasoline stockpiles were expected to have fallen while distillate inventories likely rose last week, a preliminary Reuters poll showed on Monday.

REFINERY NEWS

– Japan’s second-biggest oil refiner, Idemitsu Kosan 5019.T, shut the 150,000 barrels per day (bpd) crude distillation unit (CDU) at its Hokkaido refinery, northern Japan on June 22 for scheduled maintenance, a company spokesperson said on Tuesday.

NEWS

– Mexican state energy company Pemex is unlikely to produce any commercially viable motor fuels at its new Olmeca refinery before the end of the year, five sources said, despite pressure that it should be ready before the outgoing president’s term ends.

– Oil prices were little changed on Tuesday after rising in the previous session, helped by expectations of increased fuel demand this summer, but investors were cautious ahead of U.S. consumer price data.

– India and China were the top destinations for Russian seaborne fuel oil and vacuum gasoil (VGO) exports in May, traders said, and LSEG data showed.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)