Asia’s middle distillates markets weakened for the first time in three sessions against a backdrop of mixed demand-supply outlooks for January and persistently lower-priced sellers in the physical market.
A decline in the swaps market and ICE gasoil futures weighed on the market.
The weakness was capped by a further drop in Singapore stockpiles for the week, though forward supplies for January are still expected to be ample. The drawdown was mostly due to healthy regional demand before the year-end given some refinery maintenance and stockpiling activity.
Mixed expectations also caused overall thin liquidity, with a portion of the market still positive that demand for both winter-specs diesel and kerosene can still emerge as some countries start experiencing cold snaps.
Refining margins GO10SGCKMc1 fell to almost $22 a barrel as a result.
Spot cash premiums GO10-SIN-DIF were pressured by prompt selling interest in the open trading market, despite an overall lack of firm market discussions ahead of the holiday.
More sellers emerged from the sidelines to offer January-loading spot material, in line with earlier expectations.
Jet fuel refining margins JETSGCKMc1 slipped at a slightly quicker pace.
Regrade JETREG10SGMc1 slipped slightly below $1 a barrel, reflecting the lack of liquidity in the jet fuel swaps market.
SINGAPORE CASH DEALS O/AS
– One gasoil deal, no jet fuel deal.
INVENTORIES
– Distillate stockpiles USOILD=ECI in the U.S., which include diesel and heating oil, rose by 1.5 million barrels in the week to 115 million barrels, versus expectations for a 500,000 barrel rise, the EIA data showed.
– Gasoil and jet fuel/kerosene volumes stored at key trading hub Singapore were at 8.081 million barrels in the week ended Dec. 20, down from 8.641 million barrels a week ago, official data from Enterprise Singapore showed.
NEWS
– China’s financial hub Shanghai was set to record its coldest period in December in four decades,spurring authorities to issue warnings for low temperatures and wind, while northern cities battled icy conditions forecast to ease only next week.
– The European Union said on Wednesday it would begin an anti-dumping investigation into biodiesel imports from China, which the bloc’s industry says has slashed domestic production.
Source: Reuters (Reporting by Trixie Yap; Editing by Devika Syamnath)