January 7, 2020 / 11:17 AM / 2 months ago

Asia Distillates-Gasoil cash premiums hover near 1-mth low, cracks plunge

    SINGAPORE, Jan 7 (Reuters) - Asia's cash premiums for 10 ppm gasoil remained unchanged on
Tuesday, lingering at more than a month low, as a global sulphur cap on marine fuels is yet to
lead to the expected strong pick up in demand, traders said.
    The International Maritime Organization (IMO) has banned ships from using fuels with a
sulphur content above 0.5%, effective Jan. 1, and a section of ship-owners will have to opt for
marine gasoil (MGO) to adhere with the new rules.
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF were at 37 cents per barrel over Singapore
quotes on Tuesday, a level not seen since Dec. 3.
    Increasing number of ships are expected to switch to MGO over the next few months, as
existing inventories of very low-sulphur fuel oil (VLSFO), which has emerged as the primary fuel
of choice among shippers so far, gets depleted, traders said.
    The January/February spread for 10 ppm gasoil in Singapore widened by 1 cent
to trade at a premium of 36 cents per barrel on Tuesday, indicating the market would likely
strengthen in the coming weeks.
    Refining margins or cracks for gasoil with 10 ppm sulphur content fell to
$14.19 per barrel over Dubai crude during Asian trade, a level not seen since Dec. 12. Margins
were at $14.88 per barrel on Monday.
    Meanwhile, jet fuel cracks, which also determine the profitability of
closely-related kerosene, slumped to $13.24 per barrel over Dubai crude on Tuesday, their
weakest since end-May last year. They were at $14.01 on Monday. 
    The jet fuel market has taken a beating in recent months due to weakness in the aviation
sector, while a milder winter so far this year in Japan has kept a lid on peak kerosene demand
for heating. 
    Cash premiums for jet fuel JET-SIN-DIF were at 9 cents per barrel to Singapore quotes on
Tuesday, compared with a 2 cent premium a day earlier.
    
    SINGAPORE CASH DEALS
    - Three gasoil trades, no jet fuel deals.
    - For more information, click
    
    OTHER NEWS
    - Oil prices on Tuesday surrendered some gains made over the previous two days as investors
reconsidered the likelihood of Middle East supply disruptions in the wake of the United States
killing a top Iranian military commander.
    - OPEC oil output fell in December as Nigeria and Iraq adhered more closely to pledged
reductions and top exporter Saudi Arabia made further cuts ahead of a new production-limiting
accord, a Reuters survey found.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                           
 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close   RIC
 Spot Gas Oil 0.5%                 79.42    -2.02      -2.48        81.44  GO-SIN
 GO 0.5 Diff                       -2.08     0.10      -4.59        -2.18  GO-SIN-DIF
 Spot Gas Oil 0.25%                80.07    -2.02      -2.46        82.09  GO25-SIN
 GO 0.25 Diff                      -1.43     0.10      -6.54        -1.53  GO25-SIN-DIF
 Spot Gas Oil 0.05%                81.36    -2.04      -2.45        83.40  GO005-SIN
 GO 0.05 Diff                      -0.13     0.09     -40.91        -0.22  GO005-SIN-DIF
 Spot Gas Oil 0.001%               81.87    -2.12      -2.52        83.99  GO10-SIN
 GO 0.001 Diff                      0.37     0.00       0.00         0.37  GO10-SIN-DIF
 Spot Jet/Kero                     80.60    -2.11      -2.55        82.71  JET-SIN
 Jet/Kero Diff                      0.09     0.07     350.00         0.02  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 Vinay Dwivedi)
  
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