Asia’s middle distillates market extended its soft trend against a backdrop of persistently weak regional supply fundamentals going into April and mixed demand expectations, with margins declining for the sixth week.
April spot discussions remained brisk through the week as key refiners came out with their sale offerings, weighing on supply fundamentals, though some India-origin offers remained to be seen.
The paper market was briefly in a contango as a result of the weak physical market fundamentals mid-week, but subsequently it went back to a backwardated price structure tracking the similar shape on the ICE gasoil futures exchange.
Some concerns on dwindling inventories in the northwest Europe region limited overall market weakness, but a closed east-west arbitrage due to continuously high freight costs dimmed most hopes of a demand outlet for sellers outside of Asia.
Spot cash discounts GO10-SIN-DIF stayed near four-month lows of around 34 cents a barrel as a reflection the market weakness, while most spot tenders closed at discounts of up to $2 a barrel for April laoding this week.
A short spurt of buying interest in the open trading market created a floor for discounts this week, with at least three major traders aggressively seeking April lots.
Meanwhile, in China, commercial stockpiles continued the downtrend from a week earlier as distributors continued their shopping sprees ahead of strong demand expectations in April.
On the aviation fuel front, up to four spot jet fuel cargoes loading in April were offered by China and South Korean oil majors at the close of the week. Totally, South Korean refiners alone could have sold up to eight spot cargoes for April.
Jet fuel refining margins JETSGCKMc1 slipped at a slower rate in comparison with gasoil amid thinner spot liquiity, with regrade JETREG10SGMc1 values strengthening for the second straight week to a discount of around $1.60 a barrel.
The strong regrade value will likely push more refiners to continue their jet fuel production.
SINGAPORE CASH DEALS O/AS
– One 10ppm sulphur gasoil deal, no jet fuel deal.
INVENTORIES
– Gasoil stocks dipped 2.85% lower to 2.05 million tons, as weak demand in inland markets up the Rhine river combined with slowing imports into ARA storage, Insights Global’s Lars van Wageningen said.
REFINERY NEWS REF/OUT
– Pemex’s Deer Park, Texas, facility reported an oil spill into the Houston ship channel on Thursday, the refiner said in a community alert, adding it had isolated the site and deployed booms to contain the leak.
NEWS
– Crude oil physical markets in Europe and Africa have weakened in response to peak refinery maintenance and extra supply from the United States and Saudi Arabia, dampening the impact of Red Sea shipping delays, according to traders, flows data and analysts.
– Egypt’s fuel pricing committee in a quarterly review early on Friday raised domestic fuel prices by 11.00 Egyptian pounds for 80-octane, 12.50 pounds for 92 octane petrol, 13.50 pounds for 95-octane petrol, and 10.00 for diesel, the official gazette reported citing the petroleum ministry.
– Japanese trading house Itochu Corp 8001.T will study joint ownership and operation of ammonia-fuelled ships with Taiwan’s U-Ming Marine Transport Corp 2606.TW, Itochu said in a statement, as Japan bets on ammonia to cut emissions.
– PetroChina’s Jieyang refinery will receive its first direct crude oil cargo from Venezuela this weekend, according to trade sources and shiptracking data on Kpler, after Washington temporarily lifted sanctions on the OPEC producer.
Source: Reuters (Reporting by Trixie Yap)
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