Asia’s middle distillates markets continued to record thin trading activity for a second straight session nearing the month-end as traders were still mulling their outlooks.
Open window activity was muted as a buy-sell gap persisted, despite ongoing prompt buying interest from key trading house Trafigura.
Markets were waiting to see if there would be more September selling interest from refiners, especially from China, but offers were scant. Some were also waiting for the announcement of fresh quotas from China in the next two weeks to determine how supply outlooks would pan out.
Some bullishness remained given the widening east-west price spread in the past four trading sessions, with the front-month exchange of futures for swaps (EFS) LGOAEFSMc1 hitting a three-week high at the market’s close of nearly a $32 a ton discount.
Refining margins GO10SGCKMc1 for the fuel fell for a second straight session to almost $14 a barrel.
However, cash differentials GO10-SIN-DIF remained pressured for a second straight session this week, as lower-priced offers continue to take centrestage and the contango structure widened after prompt swap prices cooled slightly.
On the jet fuel front, the arbitrage price spread between Asia and the U.S. west coast widened slightly from yesterday’s dip but it still remains to be seen if more arbitrage trade flows can happen given the forward trading risk – though freight costs remain at two-year lows.
Regrade JETREG10SGMc1 widened slightly back to a discount of 39 cents a barrel.
SINGAPORE CASH DEALS O/AS
– No gasoil deal, one jet fuel deal.
INVENTORIES
– U.S. crude oil and product inventories were expected to have fallen last week, a preliminary Reuters poll showed on Monday.
REFINERY NEWS REF/OUT
– Seven people were in hospital, with one in a serious condition, after a fire at Russia’s Omsk oil refinery, the local governor said on Monday, although the plant said it was operating as normal and production plans would not be affected.
NEWS
– Oil prices paused recent advances to trade in a range on Tuesday, after a surge of more than 7% in the previous three sessions, on supply concerns prompted by fears of a wider Middle East conflict and the potential shutdown of Libyan oil fields.
– Two oilfields in southeast Libya have halted production and another oilfield reduced output, engineers at the fields told Reuters on Tuesday.
– CNPC, Asia’s top oil producer, is reviewing its global strategy as it looks to revive dealmaking, eyeing gas liquefaction and deepsea drilling as well as building on its record of producing more from aging wells, the head of its research arm said.
Source: Reuters (Reporting by Trixie Yap; Editing by Devika Syamnath)