Asia’s middle distillates market remained soft on persistently poor demand-supply fundamentals, with spot market discounts steepening for the second straight week and refining margins declining for the fifth week.
Spot trading liquidity was upbeat at the start of the week but discussions slowed down gradually, given that it was nearing the rollover of trading months soon.
There some expectations that the market could switch direction next week, since the April and May backwardation price structure is still steeper than March and April, one source said.
However, sales by refiners mostly remained in discounts this week, in line with earlier expectations, but the market was looking towards China for a clearer supply direction for April given the earlier expectation of lower crude runs impacting supply during the maintenance season.
“There is also an uptick in domestic diesel sales in China that we have to watch out for,” one China-based trade source said.
Spot market differentials GO10-SIN-DIF were on their eighth week of decline, with discounts steepening consecutively in the past fifteen trading sessions to 33 cents a barrel, as aggressively lower-priced sellers continued their run in the open trading market.
On the east-west arbitrage front, freight costs rose significantly during the week weighing on the price spreads between Asia and northwest Europe.
However, two refinery sources said they expected that swing suppliers in the India and Middle East will start sending their cargoes West starting April because of the increased profitability compared with this month.
Jet fuel spot market activity also picked up as major refiners started their April offers, including several China oil majors.
Regrade JETREG10SGMc1 gained slightly from last week to a discount of $1.83 a barrel, mostly due to the thinner paper market activities for jet fuel in comparison with gasoil, though overall fundamentals were still weighed on by sufficient supplies.
The market received slight support from a wider east-west arbitrage price spread between Asia and Europe, despite the gains in freight costs.
SINGAPORE CASH DEALS O/AS
– No deals for both fuels
INVENTORIES
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose by 3.6% in the week to Thursday, according to data from Dutch consultancy Insights Global.
REFINERY NEWS REF/OUT
– Vietnam’s Binh Son Refining and Petrochemical will continue selling refined petroleum products from its Dung Quat refinery during a 50-day maintenance period at the facility, the company said on Friday.
– A power blackout forced Venezuela’s largest refining complex, the 955,000-barrel-per-day (bpd) Paraguana Refining Center, to shut down on Thursday, five sources close to its operations said.
NEWS
– The oil tanker NS Century, which is under sanction by the United States, arrived at the Chinese port of Qingdao late on Thursday to discharge its cargo of Russian crude oil, LSEG shipping data showed.
– Oil prices edged lower on Friday but were on track to gain over 3% for the week, boosted by the International Energy Agency raising its 2024 oil demand forecasts and an unexpected decline in U.S. stockpiles.
– Indian state fuel retailers will cut petrol and diesel prices from Friday, the first change in about two years, ahead of the expected announcement of a date for national elections.
– Malaysia’s state energy firm Petroliam Nasional (Petronas) said on Friday it expects oil and gas markets to face continued uncertainties this year, as it reported a drop in fourth quarter profit due to lower energy prices.
Source: Reuters (Reporting by Trixie Yap; Editing by Varun H K)
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