Asia’s middle distillates markets recorded their first physical deal in five sessions on the window as prompt buying interest ticked up, although expectations of sufficient regional July supplies were still evident, with cash differentials at a one-month high.
One key South Korean refiner offered more July spot cargoes in line with expectations, taking the total number of 10ppm spot lots offered so far to eight.
However, some buying interest could still emerge for early July arrivals regionally, given several ongoing production outages, one source said.
Cash differentials swung to a premium, posting gains of 129% week-on-week, given the emerging buying interest and narrowing contango before a rollover in trading months a week later.
Meanwhile, supporting the market further, talks of very-large crude carriers being used to ship clean products such as gasoil from east to west permeated the market once again.
At least one VLCC – Plata Glory – has been confirmed to be shipping gasoil from the Middle East to Europe for now, passing by the Cape of Good Hope route. A second one, KHK Empress, is still under discussions on the Middle East-Africa route.
Refining margins received a boost and climbed for the third straight week, to almost $17 a barrel, hovering at a two-month high.
Trading activity on the jet fuel front also picked up for July cargoes, but markets were awaiting the emergence of offers from China’s oil majors to decide how the supply balance would pan out.
On the arbitrage front, the situation remains shaky given the volatile freight rates under consideration, although stronger demand from the West is expected to continue into July.
Regrade widened as a result of a discount of $1.35 a barrel, giving back gains of the past four sessions and declining by 25 cents week-on-week instead.
SINGAPORE CASH DEALS
– One 10ppm gasoil deal, no jet fuel deal
INVENTORIES
– Refined oil products stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose by more than 3% in the week to Thursday, data from Dutch consultancy Insights Global showed.
REFINERY OUTAGES
– BP’s BP.L 435,000-barrel-per-day (bpd) Whiting, Indiana, refinery plans to conduct a major turnaround in the coming months, an industry source said on Thursday.
NEWS
– Oil prices eased on Friday as markets evaluated the impact of U.S. interest rates staying higher for longer than anticipated, but crude benchmarks headed for their best week in more than two months after solid projections for crude and fuel demand.
– There is a 65% chance of the La Nina weather pattern, characterized by cold temperatures in the Pacific Ocean, developing during July-September, a U.S. government forecaster said on Thursday.
– Nigerian billionaire Aliko Dangote says his petroleum refinery on the outskirts of Lagos owes $2.7 billion in loans taken out to help build the 650,000 barrels per day plant.
Source: Reuters (Reporting by Trixie Yap; Editing by Subhranshu Sahu)