Asia’s middle distillates markets continued to display fundamental weakness amid a slew of spot discussions, with spot cash differentials logging their seventh straight week of losses and refining margins slipping for the fourth straight week.
Worries on more than sufficient supplies going into April were prominent in the market, as evidenced from the ready number of sellers both in the open trading window and on a spot sales tender front.
Spot cash differentials GO10-SIN-DIF remained in discounts of 7 cents a barrel at the week’s close as a reflection of these ample supply talks.
Demand-supply weakness in the West also forced Asian markets down as a knee-jerk reaction, with some traders hoping that the persistent downtrend in Asian cracks and prices can indirectly help in widening the east-west arbitrage spread.
If the arbitrage turns slightly viable amid the volatile performance in freight costs, some swing suppliers in India and the Middle East can send their cargoes west instead and that could ease the supply glut here, one refinery source said.
Concerns on how China’s export programme will pan out for April exacerbated the market’s softness, with data from consultancy Longzhong showing commercial inventories still at 2.5-year highs.
Diesel demand, however, is likely to tick up in April to June, during harvesting and fishing seasons, domestic major refiners are mostly betting on it for now, one China-based trading source said.
Refining margins GO10SGCKMc1 closed the trading session at around $22 a barrel, down at least 13 cents week on week.
In contrast, jet fuel market activity was slightly thin on the spot tenders front as some refiners were still biding their time for April-loading cargoes.
The market however drew some support from a mildly opened arbitrage spread between Asia and northwest Europe, unlike gasoil. Swing sellers can still send their cargoes to the West instead of east, one source said.
Regrade JETREG10SGMc1 ended up recording a volatile performance in the week, reflecting the mixed demand-supply fundamentals. The spread closed at the week’s high of a discount of $2.17 a barrel.
SINGAPORE CASH DEALS
– No gasoil or jet fuel deal.
INVENTORIES
– Gasoil stocks dropped 1.3% to 2.03 million tons, as low demand up the Rhine river in inland markets was offset by an uptick in exports to the Mediterranean, van Wageningen added.
REFINERY NEWS REF/OUT
– Marathon Petroleum Corp MPC.N completed a planned multi-unit overhaul at its 593,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas on Wednesday, people familiar with plant operations said on Thursday.
NEWS
– Oil prices rose on Friday, driven by growing demand in the world’s biggest consumers, the United States and China, while the U.S. Federal Reserve gave a positive signal on the possibility of rate cuts.
– Record Guyanese flows are adding to pressure on Johan Sverdrup crude in Europe at a time when refinery maintenance is already reducing demand, forcing values for the Norwegian grade to a 14-month low, according to export data, traders and analysts.
– TC Energy’s TRP.TO Keystone oil pipeline resumed service on Thursday after going offline and temporarily restricting a major conduit of Canadian oil to the United States, which sent oil prices higher.
Source: Reuters (Reporting by Trixie Yap; Editing by Shinjini Ganguli)
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