Asia’s 10-ppm sulphur gasoil cash premiums for November spot lots slipped for the fifth consecutive week, mirroring a narrower backwardation price structure amid strong prompt selling interest.
The premiums traded at $1.49 a barrel, and were hovering between three- and two-month lows.
Lower-priced offers were readily available since early week given the cautious supply outlooks, though a buy-sell gap limited the overall number of physical trades. Buyers emerged on Friday, cushioning overall weakness.
A closed east-west arbitrage despite expectations of strong winter heating demand from northwest Europe also continued to weigh on the market.
The exchange of futures for swaps (EFS) discount remained at slightly below $50 per metric ton and was not lucrative enough for traders.
“Expectations of stronger import demand from Europe has yet to materialised despite a heavy refinery turnaround schedule for the fourth quarter,” LSEG analysts said in a client note.
Overall market weakness was capped by some sporadic demand from other regions such as Africa, which allowed for a pull of cargoes out of Asia. Exports from northeast and southeast Asia to Africa are slated to hit a fresh nine-month high in October, Kpler and LSEG shiptracking data showed.
Buyers sought for supply outlets in this region to replenish stocks from an earlier Russian ban and a dip in exports from India and the Middle East. For the same month, volumes from Russia to Africa were at a near one-year low, the data showed.
Jet fuel refining margins surged around 21% week-on-week as broader expectations of improving heating demand, though arbitrage demand to the U.S. has weakened significantly since mid-week.
Regrade discounts fell from a three-week high of $2.15 a barrel towards the end of the week on weaker prompt gasoil swaps bullish demand expectations from the market for kerosene entering November.
SINGAPORE CASH DEALS
– No deals for both jet fuel and gasoil.
INVENTORIES
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped by 6% in the week to Thursday, data from Dutch consultancy Insights Global showed. ARA/
NEWS
– Profits at China’s industrial firms extended gains for a second month in September, adding to signs of a stabilising economy as the authorities launched a burst of supportive policy measures.
– Indonesia on Friday flew its first commercial flight using palm oil-blended jet fuel, as the world’s biggest producer of the commodity pushes for wider use of biofuels to cut fuel imports.
– China Southern Airlines 600029.SS reported on Friday its first quarterly profit in more than three years, as a pickup in international flights complemented a recovery in its home market.
– Oil prices rose by more than $2 a barrel on Friday as investors priced in fears of an escalation of conflict in the Middle East which could disrupt oil supplies, after reports that the U.S military had struck Iranian targets in Syria.
Source: Reuters (Reporting by Trixie Yap; Editing by Varun H K)