Asia middle distillates markets extended weakness from a week earlier as sufficient regional supplies and overall limited demand fluctuations weighed.
Volatility in the ICE gasoil futures markets and consistently narrow arbitrage east-west price spreads exacerbated weakness.
Ready seller availability in the open spot market through the week led to a 20% decline in spot cash premiums GO10-SIN-DIF week on week. Premiums have fallen for the sixth straight week to reach almost a three-month low.
The emergence of more China-origin cargoes for March loading also kept spot discounts for sale tenders at similar levels week on week. At least two China oil majors were still offering mid-March loading 10ppm sulphur gasoil.
Inventories remained sufficient in China, with commercial stockpiles rising to more than a one-and-a-half-year high, data from consultancy Longzhong showed.
However, the potentially better economical incentive for sellers of India- and Middle East-origin cargoes to the West for March and April could cap market softness in the near term following a slight dip in freight costs and rising supplies thereafter maintenance season, one refiner said.
On the jet fuel front, China oil majors were equally active in offering March-loading spot cargoes with most still done at steady discount levels week on week of $3 or more a barrel.
Arbitrage windows from Asia to the West were largely closed as well for aviation and heating fuel.
Declines in cracking margins for the fuel were mitigated by the return of some paper swap buyers in the spot market.
Regrade JETREG10SGMc1 strengthened 39% week on week to a discount of around $1.70 a barrel as the buyers emerged.
SINGAPORE CASH DEALS O/AS
– No deals for both fuels
INVENTORIES
– Gasoil stocks built on rising imports from the U.S., as weak demand in inland markets curbed outflows up the Rhine river, Insights Global’s Lars van Wageningen said. ARA/
NEWS
– U.S. product supplied of distillate fuel oil declined in December to 3.61 million barrels per day (bpd), down about 10% from November and the lowest since June 2020, data from the Energy Information Administration showed on Thursday.
– Oil prices edged up on Friday and were set to end the week modestly higher as markets awaited an OPEC+ decision on supply agreements for the second quarter amid differing demand indicators for key consumers U.S. and China.
– Russian oil product exports from the Black Sea port of Tuapse in March are set to rise by 21.4% month-on-month to 540,000 metric tons from 416,000 metric tons scheduled for February, two traders said on Friday.
– Asia’s major manufacturing economies struggled to claw their way out of decline in February with Japan particularly squeezed by a steeper fall in demand while an uneven recovery in China overshadowed some signs of improvement elsewhere in the region.
Source: Reuters (Reporting by Trixie Yap; Editing by Shweta Agarwal)
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