Asia’s middle distillates markets saw an uptick in paper and physical discussions as ICE gasoil futures were little changed, with some refiners still clearing prompt cargo sales.
SK Energy still had spot sales ongoing for prompt end-July loading cargoes, leading traders to believe that the market was structurally still weak in terms of supply.
Alternatively, the refiner could be looking to capitalize on getting better spot deals, given the possibility of traders shipping larger-sized cargoes out of Asia to west-of-Suez markets, one Singapore-based trade source said.
Meanwhile, the east-west arbitrage spreads remained shaky, though a decline in freight costs this week could push some swing sellers in the Middle East and India to send their cargoes west instead.
One shipbroking source said some discussions to charter very large crude carriers from east to west also fell through, possibly due to better freight costs on the smaller clean product vessels instead.
This could mean most Asia-origin cargoes could remain within the region, further weighing on sentiment.
Spot cash discussions remained in discounts of more than 30 cents a barrel, following a widening contango price structure in the July-August paper markets.
Lower-priced sellers were also readily available, weighing on overall spot market discussion levels.
Refining margins slipped for a second straight session to almost $17 a barrel, erasing earlier gains.
The regrade discount narrowed to slightly below 90 cents a barrel, reflecting the weaker performance in the gasoil markets compared with jet fuel.
SINGAPORE CASH DEALS
– One 500ppm gasoil deal, no jet fuel deal
INVENTORIES
– U.S. crude stocks plunged by much more than expected last week as refining and export activity increased, while gasoline and distillate inventories also fell, the Energy Information Administration said on Wednesday.
– Singapore’s middle distillates inventories slipped by 5.5% week on week as hefty gains in net exports of jet fuel/kerosene outweighed a decline in net exports of diesel/gasoil, official data showed on Thursday.
REFINERY NEWS REF/OUT
– A coker at LyondellBasell Industries’ 263,776 barrel-per-day (bpd) Houston refinery was operating at a reduced production level following a fire on Tuesday, said people familiar with plant operations.
Source: Bunker Port News
