Asia’s middle distillates markets started 2024 slightly firmer from the previous session, as prompt buying activities were prevalent amid firmer crude and ICE gasoil futures, with cash premiums hitting a near two-month high.
More spot liquidity is expected in the next few days, with traders awaiting the emergence of February discussions as more spot sales and procurement tenders are likely to be issued.
The east-west arbitrage, typically measured by the exchange of futures for swaps (EFS), fluctuated at around $30 per metric ton and stayed closed for both January and February.
Refining margins for the 10 ppm sulphur gasoil firmed to almost $21 a barrel.
Likewise, spot cash premiums kickstarted the year higher as well, breaching the $1 per barrel mark, tracking the wider backwardation in the swaps market between January and February and strong prompt buying interest in the open trading market.
At least one spot buyer sought for prompt deliveries and sellers were limited, underpinning discussion levels.
However, jet fuel refining margins were almost flat, weighed on slightly by ample supply expectations in the market, with some China majors still having possible last-minute January spot lots available. The arbitrage window between Asia and the U.S. West Coast stayed shut.
Regrade remained traded at discounts of close to 50 cents a barrel
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deal.
NEWS
– China’s manufacturing activity shrank for a third consecutive month in December and weakened more than expected, clouding the outlook for the country’s economic recovery and raising the case for fresh stimulus measures in the new year.
– India has hiked the windfall tax on crude oil while reducing the tax on diesel and aviation turbine fuel, according to a government notification.
– China has released 179.01 million metric tons of crude import quotas for 2024, according to Chinese industry consultancies and trade sources on Tuesday.
– Russian oil product exports from the Black Sea port of Tuapse in January are set to fall by 26.1% month on month to 1.086 million metric tons from 1.469 million metric tons scheduled for December, two traders said on Saturday.
Source: Reuters (Reporting by Trixie Yap; Editing by Krishna Chandra Eluri)