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Asia Distillates-Bullishness remain despite expectations of rising supplies

Thursday, 31 October 2024 | 01:00

Asia’s middle distillates markets were mixed as spot physical activity stayed brisk despite slowing paper market discussions, though jet fuel premiums and prices continued their decline for a second straight session.

A large portion of the market remained bullish on supply-demand fundamentals for December gasoil, despite the deluge of cargoes coming from swing suppliers to Asia for November.

Asia should be able to absorb these barrels given the limited exports from China until December and talks of refining run cuts to continue from some majors, one source said.

On the jet fuel front, more offers emerged from China’s refiners for November jet fuel spot cargoes, given the lucrativeness of the export markets expected by a few traders earlier.

Concerns however remained how long this prompt demand replenishment can soak up the cargoes coming here, one source said,though some cargoes are still headed to the U.S. west coast.

At least two jet fuel cargoes, likely totalling 95,000 metric tons, are scheduled to load from South Korea to the U.S. west coast in the next two weeks, one shipbroking source said.

Some traders are stuck as to whether they should send their jet fuel east or west for now, though at least three long-range vessels have been fixed on the Middle East/India-Asia trade route.

Refining margins for 10ppm sulphur gasoil continued its incline to hit around $15 a barrel, a two-month high.

Cash differentials gained further to around 83 cents a barrel, holding its ground at eight-month high levels, despite a lack of deals.

Front-month regrade closed the trading session at 77 cents a barrel, giving up all earlier gains as the market switched to trading for December.

SINGAPORE CASH DEALS

– No gasoil deal, one jet fuel deal.

INVENTORIES

– U.S. crude oil and fuel stocks fell last week, market sources said, citing American Petroleum Institute figures on Tuesday.

– Singapore’s middle distillates stocks gained for the first time in four weeks to almost 9.4 million barrels, despite net exports of diesel and jet fuel both climbing week on week, official government data showed on Wednesday.

– Middle distillates stocks held at Fujairah Oil Industry Zone slipped to a one-month low of 1.881 million barrels, for the week ended Oct. 28, according to industry information service S&P Global Commodity Insights.

REFINERY NEWS

– U.S. crude oil refiner Phillips 66 PSX.N plans to operate its refineries in the low to mid-90% range of combined capacity of 1.5 million barrels per day in the fourth quarter, Chief Financial Officer Kevin Mitchell said on Tuesday during a conference call with analysts.

– Oil giant Saudi Aramco 2223.SE wants to invest in the oil refinery sector and petroleum distribution in Vietnam, the Southeast Asian country’s government said late on Tuesday.

– Swiss-based energy trader Litasco is hiring experienced traders and has lined up credit lines to revive its business in the Americas that withered after Russia invaded Ukraine in 2022, three sources close to the company said.

– Nigeria’s Dangote oil refinery has a stockpile of 500 million litres of petrol, its billionaire founder said, countering claims by marketers who asserted they needed to supplement Dangote’s supplies with imports to meet fuel shortages.

– Air Canada will increase direct flights between China and Canada from December, the news arm of China’s aviation regulator said on Wednesday, after Ottawa last week removed a 2022 limit on how many services Chinese carriers could fly to Canada.
Source: Reuters (Reporting by Trixie Yap; Editing by Vijay Kishore)

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