Asia’s middle distillates markets quietened down, with spot liquidity declining slightly for November cargoes, though prompt fundamentals were seemingly still supportive.
Discounts for spot November sales were so far smaller than October, signalling that market fundamentals were slightly stronger.
More offers are likely to emerge from refiners in the next few trading sessions, though several traders’ expectations are for increased volumes month-on-month given the better profitability.
Meanwhile, on the demand front, Vietnam’s Petrolimex and PV Oil both bought cargoes for October-November and November-December arrival in the past two trading sessions.
Petrolimex bought a total of two 500ppm cargoes and one 10ppm cargo via a purchase tender that ended yesterday, some trade sources said.
The increased buying interest was likely due to lowered domestic production as one Vietnam major refiner cut its runs in October, one of the sources added.
Some traders brought up the improvement in exchange of futures for swaps (EFS) spreads starting this trading week, against a backdrop of falling stockpiles in northwest Europe.
Refining margins slipped by around 30 cents from the previous session to slightly above $12.50 a barrel.
Spot cash premiums were softer, reflecting the lower-priced offers on windows and a general lack of stronger buying interest, unlike the past two trading sessions.
For jet fuel, offers from at least one South Korea oil major emerged as well for November cargo, improving spot market liquidity slightly.
Some traders were expecting possible strength in kerosene demand next month from several northeast Asian importers to be a key driver.
Regrade gained further to around 20 cents a barrel, given the slightly steeper October-November backwardation for gasoil in comparison with jet fuel.
SINGAPORE CASH DEALS
– No deals for both fuels
INVENTORIES
– Middle distillates stocks at Fujairah Oil Industry Zone hit almost 3 million barrels, a one-month high, for the week ended Oct. 14, according to industry information service S&P Global Commodity Insights.
NEWS
– Oil prices inched higher on Wednesday amid uncertainty over what may happen next in the Middle East conflict, after demand concerns knocked the market to its lowest since early October in the previous session.
– Marine fuel sales at the United Arab Emirates’ Fujairah dipped to a three-month low in September, latest data showed, largely led by a sharp drop in high-sulphur marine fuel volumes.
– A resumption of Libyan crude output after a political crisis over the central bank slashed the OPEC member’s exports to a four-year low, has led to a surplus in crude supplies in Europe, forcing competing sellers to cut their prices, trading sources and analysts say.
– India’s crude oil imports from Russia rose by 11.7% to about 1.9 million barrels per day (bpd) in September, accounting for about two-fifths of the South Asian nation’s overall crude imports in the month, tanker data obtained from industry sources showed.
Source: Reuters (Reporting by Trixie Yap; Editing by Janane Venkatraman)