Asia’s middle distillates markets were upbeat for most of the week, with a gasoil open window deal emerging on Friday, owing to January spot sales from refiners taking centre stage though deals remained mostly in the discount territory.
China-origin barrels for January also emerged, though official quota allowances were not yet in sight. Traders are expecting the official announcement to be out by end of this month.
The diesel east-west arbitrage price spread however widened to a two-week high, providing slight support to the market, though swing suppliers could still find it lucrative to pivot their cargoes east instead of west.
Analysts are still expecting demand-supply in the west to hinge on weather changes in the next two months.
Meanwhile, term negotiations were mostly done, with settlements for 2025 lower than 2024 levels, as traders priced in bearish outlooks for next year’s fundamentals – though some analysts remained bullish on the outlook especially in the west.
Worries of slightly rising supplies for January however were still persistent given that most refineries in the main Asia region should be back online after scheduled maintenance, amid stable complex refining margins averaging at $5.30 a barrel this month.
Jet fuel spot deal levels flipped to larger-than-expected discounts, after China’s oil majors emerged with at least three spot cargoes, though production troubles still ongoing at one of Japan’s key oil major’s refinery site capped overall weakness.
Refining margins GO10SGCKMc1 fell back to around $16 a barrel, weakening by around 10 cents week on week against a backdrop of limited price volatility in paper markets.
Spot premiums GO10-SIN-DIF surged to above 60 cents a barrel, posting gains of more than 10 cents week on week, as robust buying interest continued for the third straight session.
Regrade JETREG10SGMc1 fell for the third consecutive week, closing at discounts of around 50 cents a barrel as worries of ample supply weighed.
SINGAPORE CASH DEALS
– One 10ppm gasoil deal, no jet fuel deal
INVENTORIES
– Gasoil stocks, including diesel and heating, rose by 2.7% weekly to 2.18 million tons, as buyers remained on the sidelines ahead of year-end, data from Dutch consultancy Insights Global showed.
NEWS
– Venezuela’s state oil company PDVSA and India’s Reliance Industries RELI.NS have resumed an oil swap that had been paused due to U.S. sanctions on the South American country, an internal PDVSA document seen on Thursday showed.
– Portugal’s Galp Energia GALP.LS expects to start producing biodiesel and biojet fuel from waste in an industrial-scale unit it is building at its Sines refinery in 2026, the company, which is primarily an oil producer and refiner, said on Thursday.
– U.S. crude oil exports to northwest Europe are likely to slip early next year after hitting a record high in November, as the arbitrage for transatlantic shipments has slammed shut and freight rates have climbed, analysts said this week.
– Oil prices fell on Friday on worries about demand growth in 2025, especially in top crude importer China, putting global oil benchmarks on track to end the week down nearly 3%.
– U.S. President-elect Donald Trump said on Friday that the European Union may face tariffs if the bloc does not cut its growing deficit with the United States by making large oil and gas trades with the world’s largest economy.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)