Asia’s middle distillates markets kickstarted the week with slightly thinner trading liquidity on both the physical and paper fronts as traders mulled July demand-supply fundamentals.
Paper discussions for June and July switched back into a contango price structure as supplies remained sufficient as evidenced from Taiwan’s Formosa Petrochemical Corp (FPCC) still offering prompt month-end loading spot cargoes.
At least two other refiners will start their July spot discussions soon in the coming days, two sources said.
On the demand front, outlooks were mixed with some still expecting prompt demand to be supportive from some regional users, but a portion of the market was worried that the monsoon season in some Asian regions may cap overall demand firmness.
The slower pace of month-end shortcovering demand likely also resulted in the market switch back into a contango price structure.
Refining margins closed the trading session at around $14.3 a barrel, slightly up by 30 cents a barrel.
Cash differentials for the transport and industrial fuel slipped into deeper discounts of near 20 cents a barrel against a backdrop of a buy-sell gap, though offers were scant in the afternoon trading session
Likewise gasoil, jet fuel paper market structure switched back into a contango with prompt June prices lower than July levels.
July supplies are likely to be on offer soon, said one northeast Asian refiner.
Regrade narrowed slightly to a discount of $1.36 a barrel
SINGAPORE CASH DEALS
– No deals for both fuels
REFINERY NEWS
– PBF reported a fire at its 160,000 barrels-per-day Torrance, California refinery on Saturday, according to a regulatory filing. “There are no impacts and no hazardous material releases. The refinery continues to operate normally,” the filing with the California Emergency Management Agency (CALEMA) said.
NEWS
– China’s manufacturing activity in May grew at the fastest pace in about two years with strong production and new orders, a private sector survey showed on Monday, indicating the sector remains robust amid supportive industrial policies.
– OPEC+ agreed on Sunday to extend most of its deep oil output cuts well into 2025 as the group seeks to shore up the market amid tepid demand growth, high interest rates and rising rival U.S. production.
– U.S. diesel demand fell to its lowest seasonal level in March since 1998, while crude oil output rose to a multi-month high, data from the U.S. Energy Information Administration showed on Friday.
– Chinese refiner Rongsheng Petrochemical 002493.SZ has bought its first Canadian crude cargo via the recently expanded Trans Mountain pipeline (TMX) from TotalEnergies through a tender, several trade sources said on Monday.
– Oil prices were little changed on Monday, as investors weighed a move by producer group OPEC+ to extend deep output cuts well into 2025.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)