Asia’s gasoil markets firmed in the first week this year, buoyed by some prompt demand for physical cargoes from a major trading house, a decline in regional stockpiles and mixed outlooks on February market fundamentals.
An post-holiday increase in trading volumes underpinned markets further, with four physical deals in the open trading market for the first time in five months.
Strong buying interest was present in the physical markets since early week, reflecting some short-covering demand amid a wider prompt-forward market backwardation structure week-on-week.
A decline in stockpiles in both Singapore and the ARA region provided further support, though the sizeable backwardated market structure could have caused some sellers to clear their stockpiles quickly.
The closed east-west arbitrage, measured by the exchange of futures for swaps (EFS), limited overall market gains. The differential continued to fluctuate at discounts of between $20 and $40 per metric ton.
Spot cash premiums GO10-SIN-DIF for end-January and February cargoes were mostly on an uptrend, closing at 90 cents a barrel on Friday, tracking the steeper backwardation in the swaps market and consistently strong prompt buying interest. Several deals were done through the week, with the key buyer being trading major Vitol.
Refining margins GO10SGCKMc1 steadied at $21 a barrel on Friday.
Jet fuel trading activity subsided as some China majors cleared their January sales requirement and were not in a hurry to enter February discussions. Refining margins JETSGCKMc1 for the aviation and heating fuel overall still rose, but at a slower pace compared with gasoil.
Regrade JETREG10SGMc1 posted its second consecutive week of losses, in line with the strength in gasoil futures and overall limited positive drivers in the jet fuel market.
SINGAPORE CASH DEALS O/AS
– Four gasoil deals, no jet fuel deal.
INVENTORIES
– U.S. gasoline and distillate inventories posted large builds last week as demand slipped, while crude stocks fell more than expected, the Energy Information Administration said on Thursday, news that sank prices for crude, gasoline and heating oil.
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell by 2% in the week to Thursday to 1.787 million metric tons, according to data from Dutch consultancy Insights Global.
NEWS
– China’s oil trade with Iran has stalled as Tehran withholds shipments and demands higher prices from its top client, tightening cheap supply for the world’s biggest crude importer, refinery and trade sources said.
– Parts of the river Rhine in Germany were closed to shipping on Friday after heavy rain raised water levels, but the river could reopen over the weekend, navigation authorities said.
– Mexican state oil company Pemex’s top executive estimated on Thursday that the firm’s newest refinery will process 243,000 barrels per day (bpd) of crude in 2024 during its first year of operations, before reaching nearly full capacity in 2025.
Source: Reuters (Reporting by Trixie Yap,Editing by Tomasz Janowski)