Asia’s 10 ppm sulphur gasoil cracking margins GO10SGCKMc1 rose by 11% week on week on Friday with support from the West and firmer crude futures being the uptrend drivers.
The arbitrage differential between Asia and northwest Europe, measured by the exchange of futures for swaps, hovered at fresh highs since early this year.
So far, two cargoes totalling around 150,000 metric tons are likely heading from northeast Asia to Europe, Kpler shiptracking data showed.
“The east-west (arbitrage) dynamics continue to favour Europe, with Arab-Gulf and west coast India barrels pointing in that direction (instead of Asia), a trend expected to persist in the medium term,” Sparta Commodities analyst James Noel-Beswick said.
Ample northeast Asian supplies capped the market’s upside overall.
“China’s escalating refined product exports, particularly in August when they reached a six-month high, and the anticipation of September’s gasoil exports doubling compared to August, are impacting the Asian pricing complex,” said Sparta Commodities analyst James Noel-Beswick.
September outflows from Asia are on course to exceed August volumes, supported by heavier export volumes from China, LSEG analysts said on a client report.
Cash differentials GO10-SIN-DIF rose to $2.36 a barrel week on week as buying interest for October spot lots remained prevalent in the open trading market.
On the jet fuel front, refining margins JETSGCKMc1 climbed 10% week on week as arbitrage demand opportunities from the West emerged, with lucrative margins for Asian sellers to both Europe and the United States.
Gains were capped however by dismal international flight numbers from China for September. International flight capacity numbers out of China remains at 54% of pre-pandemic numbers, data from aviation analytics firm OAG showed.
Regrade JETREG10SGMc1 widened to a discount of above $2 a bbl towards the end of the week as strength in gasoil prices were more prevalent.
SINGAPORE CASH DEALS O/AS
– No gasoil deals, one jet fuel deal.
INVENTORIES
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub declined by 1% in the week to Thursday, data from Dutch consultancy Insights Global showed.
NEWS
– China’s oil refinery throughput in August rose to a record, data showed on Friday, as processors in the world’s second-largest crude consumer kept run rates high to meet summer travel demand and capitalise on strengthening export margins.
– China’s aviation regulator said on Friday that air passenger numbers in August rose 98.0% from a year earlier, reaching a historical high. However, international passenger transportation has only recovered to 52.0% of the same period in 2019.
– A slump in China’s property sector worsened in August, with deepening falls in new home prices, property investment and sales, despite a recent flurry of support measures, adding pressure to the world’s second-largest economy.
– Oil prices rose on Friday and are set for a third weekly gain, as better-than-expected Chinese economic data and reports of record oil consumption bolstered the view that demand in the world’s second-largest crude consumer will continue to surge.
Source: Reuters (Reporting by Trixie Yap; Editing by Maju Samuel)