Asia’s middle distillates markets went back into a contango structure on a paper basis on Friday, with margins dipping week on week and cash discussions flipping back into discounts, after demand-supply outlooks turned slightly cautious for July.

While the July-August price spread was forced into a backwardated structure most parts of the week, the market turned back into contango on Friday as ample supplies continued to weigh.

South Korean refiners were still offering similar volumes of July spot cargoes compared with a month earlier, Reuters record showed. For 10ppm sulphur cargoes, SK Energy offered a total of 10 spot lots, though they may have sold fewer, while GS Caltex offered up to four spot lots.

The market continues to be discussed in discounts of nearly $1.50 a barrel for most July-loading shipments from key refiners.

Refining margins fell by around 50 cents week on week, reflecting the late-week weakness.

Cash differentials flipped back into parity levels after ready selling interest emerged consistently in the latter half of the week, against a backdrop of weaker July paper prices.

On the jet fuel front, markets were split with a portion cautious on demand fundamentals, amid expectations of ample supplies from China in July – as evidenced from spot offers coming out on a discount basis in the open trading window.

A handful of refiners were still bullish on demand in the near-term because of the summer travel season.

Regrade widened further to a discount of $1.40 a barrel from a week earlier, but the market saw ready sellers on Friday.

SINGAPORE CASH DEALS

– One 10ppm gasoil deal, one jet fuel deal

INVENTORIES

– – U.S. crude oil, gasoline and distillate inventories fell last week, the Energy Information Administration said on Thursday as crude exports rose.

– Refined oil products stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell by nearly 4% in the week to Thursday, data from Dutch consultancy Insights Global showed.

REFINERY NEWS

– Hengyuan Refining Company Bhd expects an unplanned shutdown of its long-residue catalytic cracking unit (LRCCU) to impact its revenue, the company said in a bourse filing late on Thursday.

NEWS

– Crude oil futures were little changed on Friday, but were on course to rise for a second week amid signs of improving demand and falling oil and fuel inventories in the U.S., the world’s biggest oil consumer.

– Global commodities trader Trafigura loaded diesel onto a supertanker in the Middle East this week, taking advantage of lower freight rates for crude tankers to send more fuel to the West, according to shipping data and several trade sources.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)