March 6, 2020 / 11:01 AM / 3 months ago

Asia Distillates-Gasoil cracks weaken to post fourth weekly drop

    SINGAPORE, March 6 (Reuters) - Asian refining margins for 10 ppm gasoil slipped on Friday,
posting their fourth consecutive week of losses, as the coronavirus epidemic continued to impair
industrial and transportation demand in the region grappling with ample supplies.
    Refining margins or crack spreads for gasoil with 10 ppm sulphur content eased
to $8.95 per barrel over Dubai crude during Asian trading hours, 3 cents lower from Thursday.
    Cracks for the benchmark gasoil grade, which are currently trading at their lowest March
levels in the last seven years, have shed about 5% this week in their fourth straight weekly
drop, Refinitiv Eikon data showed.
    The gasoil market in the region has taken a major hit from the rapidly spreading virus
outbreak, which originated in China, prompting the country to ramp up fuel exports to compensate
for losses to domestic demand.
    The world's second-largest oil consumer has not been able to prevent a surplus even after
lowering its refining output.
    China's gasoil exports closed at 2.1 million tonnes in February, significantly higher than
1.3 million tonnes in January and last year's average of 1.8 million tonnes per month, according
to Refinitiv oil research assessments.
    "Factories in China appear to be resuming operations this week, following an extended
layoff, and while this could spark some industrial activity to life, it also inevitably raises
the risk of a renewed spread of the virus," said Peter Lee, senior oil & gas analyst at Fitch
Solutions.
    "This is set to be a challenging year for gasoil cracks. The anticipated boost from IMO 2020
has been much more muted, due to slower global growth and ample availability of alternative
fuels, even before Covid-19 undercut consumption of the fuel in industries."
    An expected demand boost for marine gasoil (MGO) following a switch to cleaner marine fuels
this year never quite materialized as ship operators preferred very-low sulphur fuel oil (VLSFO)
over MGO for technical advantages.
    Cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a discount of 3 cents per barrel
to Singapore quotes on Friday, compared with an 8-cent discount on Thursday.
    Meanwhile, cash discounts for jet fuel JET-SIN-DIF narrowed to 13 cents per barrel to
Singapore quotes on Friday, compared with a discount of 20 cents per barrel on Thursday.
    Jet fuel cracks dipped to $6.60 per barrel over Dubai crude on Friday, down
from $6.79 a day earlier. The cracks for the aviation fuel have dropped 7% this week.
    
    ARA STOCKS
    - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and
storage hub STK-GO-ARA rose 1.6% to 2.2 million tonnes in the week to March 5, data from Dutch
consultancy Insights Global showed.
    - ARA jet fuel inventories STK-JET-ARA were up 3.3% at 432,000 tonnes, the data showed.
    - Compared with a year earlier, jet fuel stocks were 33.4% lower, while gasoil inventories
dropped 10.4%.
    
    SINGAPORE CASH DEALS
    - Three gasoil trades, no jet fuel deals
    - For more information, click
    
    OTHER NEWS
    - OPEC pushed on Thursday for a bigger-than-expected oil output cut to support prices that
have been hit by the coronavirus outbreak, effectively presenting its non-OPEC partners with an
ultimatum to back the move or face a price collapse.
    - OPEC's proposal to curb supplies by an extra 1.5 million barrels per day (bpd) until the
end of 2020 was a surprise, given the group was expected to propose cuts of 1 million bpd and,
hours earlier on Thursday, had said curbs should be limited to the second quarter.
    - Oil prices slid 2% on Friday on concerns that Russia may not agree to a steeper OPEC+
output cut to support prices and on the spectre of a prolonged economic slowdown due to the
coronavirus outbreak.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                       
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               55.72    -2.24      -3.86       57.96  GO-SIN
 GO 0.5 Diff                     -2.08     0.01      -0.48       -2.09  GO-SIN-DIF
 Spot Gas Oil 0.25%              55.99    -2.24      -3.85       58.23  GO25-SIN
 GO 0.25 Diff                    -1.81     0.01      -0.55       -1.82  GO25-SIN-DIF
 Spot Gas Oil 0.05%              56.68    -2.24      -3.80       58.92  GO005-SIN
 GO 0.05 Diff                    -1.12     0.01      -0.88       -1.13  GO005-SIN-DIF
 Spot Gas Oil 0.001%             57.78    -2.19      -3.65       59.97  GO10-SIN
 GO 0.001 Diff                   -0.03     0.05     -62.50       -0.08  GO10-SIN-DIF
 Spot Jet/Kero                   55.23    -2.28      -3.96       57.51  JET-SIN
 Jet/Kero Diff                   -0.13     0.07     -35.00       -0.20  JET-SIN-DIF
                                                                                       
 For a list of derivatives prices, including margins, please double                    
 click the RICs below.                                                  
 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                                                                    
 
 (Reporting by Koustav Samanta; Editing by Ramakrishnan M.)
  
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