Asia’s middle distillates markets recorded a rebound in margins for the first time in four trading sessions against a backdrop of stronger paper discussion levels and possibly weaker crude price expectations, despite slightly muted physical cargo activity.

Expectations of firmer prompt demand in the near-term, as some regions such as Australia, Indonesia and Japan replenish their stockpiles due to refinery maintenance season, have been cushioning the extent of recent price weakness, two Singapore-based trade sources said.

May cargo flows from Middle East and India to Singapore and the Singapore straits region are slated to hit a four-month high, shiptracking data from Kpler and LSEG showed, adding to current ample regional availability.

Traders are also watching how exports will pan out from northeast Asia-based refiners for July, given that discussions should start soon and talks of refinery run cuts were still in place at least until July.

Refining margins closed the trading session at slightly above $14.50 a barrel.

Cash differentials remained in the discount trajectory amid a buy-sell gap and lack of competitively-priced sellers. Discussions were mildly slower from the previous trading session.

Jet fuel refining margins were buoyed by a faster pace of activity in the paper markets, with robust demand in the open trading window for physical cargoes also evident.

Markets were buoyed by possibly strong demand in the West over the holiday season, with US domestic flight seat numbers at unprecedented highs in the past five years, OAG flight data showed.

Spot cash discussions firmed back to premiums of around 20 cents a barrel because of a lack of sellers in the market.

Regrade narrowed as a result to discounts of around $1.30 a barrel.

SINGAPORE CASH DEALS

No deals for both fuels.

NEWS

Mexican state energy company Pemex exported 681,000 barrels per day (bpd) of crude oil in April, a year-on-year decrease of 31%, company numbers showed, as production has been declining for the past few months.

Saudi Arabia, the world’s biggest oil exporter, may cut prices for most crude grades it sells to Asia in July, the first cut in five months, as Middle East benchmarks and margins for Asian refiners have weakened, refining sources said.
Source: Reuters (Reporting by Trixie Yap; Editing by Janane Venkatraman)