February 13, 2019 / 10:45 AM / 4 months ago

Asia Distillates-Gasoil cash differentials weaken, prompt-month spread widens

    SINGAPORE, Feb 13 (Reuters) - Asia's cash differentials for 10ppm gasoil weakened on
Wednesday, hurt by weaker demand in the physical market, while the prompt-month time spread
widened its contango structure.
    Cash discounts for 10ppm gasoil GO10-SIN-DIF were at 43 cents a barrel to Singapore
quotes, compared with a discount of 35 cents a barrel on Tuesday.
    The gasoil cash differentials, after Singapore's benchmark was shifted to 10ppm gasoil in
the beginning of last year, touched their lowest of a 98-cent discount in December and have
since gained about 48 percent over the last seven weeks.
    The Feb/March spread widened by a cent to a discount of 45 cents a barrel on
Wednesday, compared with 44 cents per barrel a day earlier.
    Contango market structure, where prompt prices are lower than those for future delivery,
tends to encourage holders of physical barrels to store the product and sell it later to secure
higher prices. 
    Upcoming spring maintenance outages at some of the regional refineries would likely curb
gasoil supply over the next couple of months, but some traders said the availability might not
be as tight as expected, thanks to more shipments coming out of China.
    "I guess the usual 10ppm (gasoil) buyers in the market are not so in a hurry even though
they're aware that the spring turnarounds are around the corner," a Singapore-based middle
distillate trader said.
    "This year the market is quite relaxed as some traders believe the Chinese would still be
exporting. So as long as there are Chinese barrels, the market is not going to be very tight." 
    Refining margins or cracks for gasoil with 10ppm sulphur content climbed to
$14.53 a barrel over Dubai crude on Wednesday, despite a rise in crude oil prices. They were at
$14.39 a barrel on Tuesday. 
    Meanwhile, jet fuel cracks also rose to $13.53 a barrel over Dubai crude during
Asian trading hours, compared with $13.44 on Tuesday.
    Cash discounts for jet fuel JET-SIN-DIF widened to 34 cents a barrel to Singapore quotes
on Wednesday, compared with a discount of 29 cents a barrel on Tuesday. 

    
    FUJAIRAH STOCKS
    - Middle distillate inventories in the Fujairah Oil Industry Zone (FOIZ) rose 4 percent from
a week ago to 2.4 million barrels in the week to Feb. 11, data via S&P Global Platts showed.

    - Middle distillate stocks in the Fujairah oil hub have averaged about 1.8 million barrels
so far in 2019, Reuters calculations showed. This compares with a weekly average of 2.8 million
barrels in 2018.
    - The build of 90,000 barrels in the week to Monday takes Fujairah middle distillate stocks
to their highest levels in twelve weeks.
    - Compared with year-ago levels, the weekly Fujairah middle distillate stocks were mostly
unchanged.
    
    
    API INVENTORY DATA
    - U.S. crude stocks fell unexpectedly last week, while gasoline inventories increased and
distillate stocks drew, industry group the American Petroleum Institute said on Tuesday.

    - Crude inventories fell by 998,000 barrels in the week to Feb. 8 to 447.2 million, compared
with analysts' expectations for an increase of 2.7 million barrels.
    - Distillate fuels stockpiles, which include diesel and heating oil, fell by 2.5 million
barrels, compared with expectations for a 1.1 million-barrel drop, the API data showed.
   
    
    SINGAPORE CASH DEALS
    - Two gasoil deals, one jet fuel trade.
    - Winson Oil sold two separate cargoes of 166,000 barrels of 10ppm gasoil each to Vitol for
Feb. 28-March 4 loading at a discount of 45 cents a barrel to Singapore quotes.
    - Singapore trader Hin Leong bought 100,000 barrels of jet fuel from Zenrock for March 2-6
loading at a discount of 30 cents a barrel to Singapore quotes.
    - For more information, please click   
    
    
    OTHER NEWS
    - Asia's oil refiners are increasingly finding themselves trapped between the rock of OPEC's
production cuts and the hard place of U.S. President Donald Trump's sanctions against Iran and
Venezuela.
    - Oil prices rose on Wednesday as producer club OPEC said it had cut supply deeply in
January and as U.S. sanctions hit Venezuela's oil exports.
    - OPEC said on Tuesday it had cut oil production steeply under a global supply deal,
although it flagged headwinds confronting its efforts to prevent a glut this year including
weaker demand and higher rival output.
    - Venezuela's oil exports have tapered off and shifted toward India since new U.S. sanctions
began Jan. 28 as state-run oil company PDVSA seeks to replace deliveries to the United States
and Europe that were disrupted by payment restrictions.


    
    ASSESSMENTS    
 MID-DISTILLATES                                                                               
 CASH ($/T)             ASIA CLOSE         Change   % Change    Prev Close    RIC
 Spot Gas Oil 0.5%                  74.61     1.24        1.69         73.37  GO-SIN
 GO 0.5 Diff                        -2.72     0.01       -0.37         -2.73  GO-SIN-DIF
 Spot Gas Oil 0.25%                 75.14     1.24        1.68         73.90  GO25-SIN
 GO 0.25 Diff                       -2.19     0.01       -0.45         -2.20  GO25-SIN-DIF
 Spot Gas Oil 0.05%                 75.69     1.23        1.65         74.46  GO005-SIN
 GO 0.05 Diff                       -1.64    -0.01        0.61         -1.63  GO005-SIN-DIF
 Spot Gas Oil 0.001%                76.90     1.15        1.52         75.75  GO10-SIN
 GO 0.001 Diff                      -0.43    -0.08       22.86         -0.35  GO10-SIN-DIF
 Spot Jet/Kero                      76.02     1.12        1.50         74.90  JET-SIN
 Jet/Kero Diff                      -0.34    -0.05       17.24         -0.29  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 Shreejay Sinha)
  
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