Asia’s cash differentials for 10 ppm gasoil flipped to a premium on Wednesday, for the first time in nearly six months, buoyed by active buying interest for physical cargoes.
Cash differentials for gasoil with 10 ppm sulphur content GO10-SIN-DIF rose to a narrow premium of 1 cent a barrel to Singapore quotes, a level not seen since Aug. 7. They were at a discount of 1 cent per barrel on Tuesday.
The February/March time-spread for 10 ppm gasoil in Singapore, which turned to a backwardation this week, traded at a premium of 2 cents per barrel, Refinitiv Eikon data showed.
In backwardation, the prompt-month contract is more expensive than subsequent months. This makes it uneconomical to store the product and leads to a drawdown in stocks, which in turn is usually seen as a sign that prices are likely to head higher in future months.
Lack of arbitrage opportunities and currently high refining run rates in the region, however, could result in abundant supplies and weigh on short-term fundamentals before the spring turnaround season kicks in, trade sources said.
Refining margins or cracks for 10 ppm gasoil rose 7 cents to $6.61 a barrel over Dubai crude during Asian trading hours, the strongest level since July last year. The cracks for the benchmark gasoil grade have surged 18.7% in the past week.
INVENTORIES
– Middle-distillate inventories in the Fujairah Oil Industry Zone rose about 15% to 5.2 million barrels in the week ended Feb. 1, data via S&P Global Platts showed.
– The weekly stocks in Fujairah have averaged 4.5 million barrels so far this year, compared with weekly averages of 4.2 million barrels in 2020, and 2.4 million barrels in 2019, Reuters calculations showed.
– U.S. distillate fuel inventories, which include diesel and heating oil, fell by 1.6 million barrels in the week to Jan. 29, compared with analysts’ expectations for a draw of 429,000 barrels, data from industry group the American Petroleum Institute showed on Tuesday.
SINGAPORE CASH DEALS
– Three gasoil deals, one jet fuel trade
OTHER NEWS
– Oil prices rose on Wednesday after hitting their highest in about a year in the previous session, boosted by an unexpected draw in U.S. crude and gasoline stocks, fuelling demand recovery hopes as OPEC+ forecasts the market will be in deficit in 2021.
ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RIC Spot Gas Oil 0.5% 62.25 1.02 1.67 61.23 GO 0.5 Diff -1.62 -0.02 1.25 -1.6 Spot Gas Oil 0.25% 62.35 1.02 1.66 61.33 GO 0.25 Diff -1.52 -0.02 1.33 -1.5 Spot Gas Oil 0.05% 62.62 1.02 1.66 61.6 GO 0.05 Diff -1.25 -0.02 1.63 -1.23 Spot Gas Oil 0.001% 63.88 1.06 1.69 62.82 GO 0.001 Diff 0.01 0.02 -200.00 -0.01 Spot Jet/Kero 61.23 1.16 1.93 60.07 Jet/Kero Diff -0.11 0.06 -35.29 -0.17 Brent M1 Gasoil M1 Gasoil M1/M2 Gasoil M2 Regrade M1 Regrade M2 Jet M1 Jet M1/M2 Jet M2 Gasoil 500ppm-Dubai Cracks M1 Gasoil 500ppm-Dubai Cracks M2 Jet Cracks M1 Jet Cracks M2 East-West M1 East-West M2 LGO M1 LGO M1/M2 LGO M2 Crack LGO-Brent M1 Crack LGO-Brent M2
Source: Reuters (Reporting by Koustav Samanta; Editing by Sherry Jacob-Phillips)
