Asia’s middle distillates markets saw slightly more upbeat activity on the physical front, with open window and spot tender liquidity increasing and margins hitting a three-month high, though price changes were minimal.
Several regional refiners emerged to start their August sales, in line with earlier expectations, adding to improving spot market liquidity.
Meanwhile, some refinery production disruptions in northeast Asia stoked some fears of tightening prompt supplies and buoyed markets slightly against a backdrop of at least 1% gains in ICE gasoil futures.
However, expectations of some refiners increasing their crude runs soon because of improving complex refining margins the past two weeks offset the positivity from prompt disruptions, three sources said.
At least two more very large crude carriers was heard to be available for the chartering of refined fuels from Asia to the west of Suez markets, two shipbroking sources said.
Refining margins hit nearly $18.50 a barrel, a new high since early April.
In the spot market, however, differentials were stable as a reflection of the buy-sell gap in the trading window and unchanged contango market structure.
Refiners are expecting better domestic demand for jet fuel to emerge during the summer travel season and that could decrease some spot volumes, one source said, adding it could keep regrade discounts narrow in the near term.
However, bearishness was still seen by some traders selling lower-priced cargoes in the open window as they expect supply to still be ample if refineries decide to up their runs.
Regrade widened slightly, however, to a discount of $1.40 a barrel because of the strength in gasoil compared with jet fuel.
SINGAPORE CASH DEALS
– One gasoil deal, one jet fuel deal.
INVENTORIES
– U.S. crude oil and product stockpiles were expected to have fallen last week, a preliminary Reuters poll showed on Monday.
REFINERY NEWS
– A fire broke out at Idemitsu Kosan’s Chiba refinery early Tuesday afternoon, a company spokesperson said, adding that no further details were available for now.
– Eneos Corp shut the 175,000 barrel-per-day (bpd) crude distillation unit (CDU) at its Kashima refinery on June 29 due to a system glitch, a spokesperson for Japan’s biggest refiner said on Tuesday.
– Japanese oil refiner Taiyo Oil has shut two crude distillation units (CDUs) late last month at its 138,000 barrel per day (bpd) Shikoku refinery in western Japan for scheduled maintenance, a company spokesperson said on Tuesday.
NEWS
– Oil prices were little changed on Tuesday, holding near the two-month highs reached in the previous session, on expectations for rising fuel demand from the summer travel season and possible U.S. interest rate cuts that could boost economic growth.
– Shell said on Tuesday it will pause construction work at its biofuels facility in the Netherlands due to weak market conditions, the latest step under CEO Wael Sawan’s drive to boost the energy company’s returns.
– Venezuela’s June oil exports were largely flat at around 760,000 barrels per day (bpd) as U.S. licenses supported half of month’s shipments to destinations in the U.S. and Europe, according to shipping data and documents.
Source: Reuters (Reporting by Trixie Yap; Editing by Arun Koyyur)