Asia’s middle distillates markets were upbeat on a physical basis in the open trading window on Thursday, with two jet fuel deals done for the first time in almost a year as Vitol continued its buying spree.
Vitol has so far bought a total of 1.077 million barrels of the aviation fuel for loading between mid-July and mid-August from the Straits region and 300,000 barrels loading from the Middle East, Reuters records showed.
Several northeast Asia-origin cargoes will still be heading to the West of Suez markets despite the narrow east-west arbitrage price spread, according to two shipbroking sources, with up to 180,000 tons so far loading from South Korea.
Regrade JETREG10SGMc1 remained at around $1 a barrel discounts for a second straight trading session, slightly supported in the meantime by these east-west flows, though spot supply for August stayed ample.
On the gasoil front, paper market activity was little changed – given the stagnating contango price structure – and the physical markets remained at a standstill amid a buy-sell gap.
Cash differentials GO10-SIN-DIF rose slightly by 2 cents to close at a discount of 27 cents a barrel as a reflection of some buying interest of Trafigura, though lower-priced offers were scant throughout.
Refining margins for the fuel recovered to a three-week high, with some analysts attributing it to the weakness in crude futures the past two trading sessions.
SINGAPORE CASH DEALS
– Two jet fuel deals, no gasoil deal.
INVENTORIES
– Singapore’s middle distillates stockpiles were above 11 million barrels for a second straight week as gains in jet fuel/kerosene net exports offset the rise in diesel/gasoil imports, though the country turned a net importer of the latter this week, official data showed on Thursday.
– U.S. oil inventories fell across the board last week on higher crude exports and gasoline demand, the Energy Information Administration said on Wednesday.
NEWS
– Saudi Arabia imported fuel oil from Kuwait for the first time in more than two years in July to help meet peak summer power demand while discounted supplies from Russia fell, according to trade sources and shipping data.
– Oil prices fell on Thursday on mixed demand signals a day after large draws on U.S. inventories while consumption in China, the world’s largest crude importer, remains lacklustre.
– U.S. oil refiners are expected to report sharply lower second-quarter earnings from a year ago after a listless summer driving season that weakened refining margins, energy analysts said.
– Mexico’s incoming President Claudia Sheinbaum will likely face a new challenge fulfilling the dream of energy independence that led her predecessor to spend $17 billion on a new refinery: a shortfall in domestic crude supply.
Source: Reuters (Reporting by Trixie Yap; Editing by Sonia Cheema)