Asia’s middle distillates markets were supported for a third consecutive session by stronger performance in the West, despite thin trading activity within the region and December spot discussions yet to emerge.
The December east-west arbitrage spread, measured by the exchange of futures for swaps (EFS) differential between prompt month gasoil swaps and ICE gasoil futures, widened to a two-week high discount of $58 a metric ton.
Analysts are still expecting Europe’s import demand to emerge in the near term and support global prices until the year end.
While there are still some bearish demand factors “such as reduced German gasoil demand and signs of an economic downturn in the Eurozone reflected in the downward trend of ICE gasoil cracks”, the market has rallied in the past few days and this reflects the clear signals from Europe that it requires additional product supplies, said Sparta Commodities analyst James Noel-Beswick.
Refining margins GO10SGCKMc1 for 10ppm sulphur gasoil climbed to around $24.80 a barrel.
Spot cash premiums GO10-SIN-DIF for the fuel rose by 4 cents, but activity remained limited in the open trading market amid a buy-sell gap.
However, some cautiousness among trade sources on how Asian heating demand will pan out during the winter season capped overall market gains, with one Japanese refiner saying that import demand could be delayed this year by sufficient local stocks with respect to jet fuel/kerosene.
Jet fuel refining margins JETSGCKMc1 rose in tandem, with the regrade JETREG10SGMc1 remaining almost unchanged from the previous session. Source: Hellenic Shipping News
