Asia’s middle distillates trading activity was upbeat even at the end of the week, with a flurry of deals as traders mulled August outlooks, and the front-months paper market structure kept in a steady contango.

Northeast Asia-based key refiners all resurfaced to start their August sales, with more likely to emerge in the next week, as traders eye the quantity that will be available.

Still, discussions for these cargoes remain in the $1-$2 per barrel range, which some traders say is a sign that the market is fundamentally weak.

Refining margins rose slightly to $16.50 a barrel, from around $16 a barrel last week.

However, open window spot cash markets GO10-SIN-DIF fell to the lowest of the week on Friday, but were little changed week-on-week at a discount of 30 cents a barrel, as selling interest remained strong.

Jet fuel markets were slightly pressured by the limited demand outlets regionally and a lack of arbitrage opportunities to the west of Suez markets, as evidenced from the discount levels the market was talking about.

Regrade JETREG10SGMc1 widened week-on-week to a discount of $1.17 a barrel.

SINGAPORE CASH DEALS O/AS

– One 500ppm gasoil deal, one jet fuel deal

INVENTORIES

– ARA gasoil inventories stood at 2.16 million tons, falling 1.2% on the previous week, as imports slowed and exports to other regions picked up.

NEWS

– China’s crude oil imports in June dropped 11% from a high base a year earlier and first-half imports fell 2.3% in a rare year-to-date decline, data showed on Friday, as fuel demand disappoints and as independent refiners reduced production due to weak profit margins.
– Oil prices rose on Friday amid signs of easing inflationary pressures in the United States, the world’s biggest oil consumer, with Brent crude peaking above $86 though it was still set for a weekly decline.
Source: Reuters (Reporting by Trixie Yap; Editing by Varun H K)