Asia’s diesel and cash differentials surged to near 1.5-year highs, breaking past a few sessions of limited price fluctuations, reflecting the strength in sentiment especially from the West amid fresh Russian sanctions despite a lack of supply-demand fundamental shifts.
ICE gasoil futures remained firmly propped up as a knee-jerk reaction to a new European Union sanction package on Russia and overnight inventory draws in the northwest Europe region, despite tepid demand.
Asian paper markets rose, especially for August, reflecting the robust trading sentiment for front-month discussions.
The front-month diesel east-west jumped back to discounts of $50-52 a metric ton, with northwest European markets climbing at a faster pace than Asian prices.
On the trading window, deals emerged for the first time this week at much higher premiums as a reflection of the steeper market backwardation, with cash differentials jumping to $1.89 a barrel – its highest level since early February last year.
For jet fuel, the front-month east-west price spread remained wide in most parts of the week, maintaining above discounts of $43 per ton, according to data from several trade sources. July-loading volumes on the east-west route will likely stay brisk, they added.
Despite the strength in east-west arbitrage trade flows, regrade widened from a week earlier as gasoil markets proved stronger and the spread hit its widest.
SINGAPORE CASH DEALS
– Two gasoil deals, no jet fuel deals
INVENTORIES
– Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining hub fell by nearly 5% on the week to their lowest since December 2023, data from Dutch consultancy Insights Global showed on Thursday.
REFINERY NEWS
– India’s state-run Oil and Natural Gas Corporation ONGC is exploring building a 200,000-240,000 barrels per day refinery at Jamnagar in the western Indian state of Gujarat, a company source said on Thursday.
NEWS
– Brazilian state-run oil firm Petrobras may redirect the oil it sells to the United States, sending more to Asia and Pacific markets due to higher tariffs the U.S. announced on Brazil, its chief executive told Reuters on Thursday.
– China’s exports of refined products, including diesel, gasoline, aviation fuel and marine fuel, fell 0.6% year-on-year to 5.34 million tons in June, according to the customs data, though the figure marked the highest monthly total since June 2024.
– Oil prices rose on Friday after the European Union agreed to new sanctions against Russia, also underpinned by supply concerns following drone attacks on northern Iraqi oilfields and tight market fundamentals.
Source: Reuters