April 24, 2020 / 11:21 AM / a month ago

Asia Distillates-Gasoil cracks drop to record low as demand crumbles

    SINGAPORE, April 24 (Reuters) - Asian refining margins for 10 ppm gasoil plunged to a
record low on Friday as the region remained awash with supplies after demand for the
transportation fuel continued to crumble due to coronavirus-led lockdowns
    Refining margins, also known as cracks, for gasoil with 10ppm sulphur content
 dropped $5.27 per barrel over Dubai crude during Asian trading hours, the
lowest on record according to Refinitiv Eikon data that goes back to January 2014.
    Cracks for the benchmark gasoil grade in Singapore, which were at $6.09 per barrel on
Thursday, have slumped 39% this week in their biggest weekly drop in three weeks.
    Refining run cuts could not limit the supply glut in the region, while the situation
has been made worse by lockdown in markets such as India, where diesel demand for personal
transportation is much more than other countries, market watchers said.
    "India's April gasoil exports are currently assessed at 2.1 million mt and are
forecast to close at around 2.5-2.6 million mt, steady versus March's 2.52 million mt,"
according to Refinitiv Oil research assessments.
    "The flattening EFS (exchange of futures for swaps) spread has led Indian gasoil
cargoes to swing East, with 937,000 mt, or 45%, headed to Asia (in April), the largest
proportion since September 2017," according to Refinitiv Oil research assessments.
    The exchange of futures for swaps, which determines the gasoil price spread between
Singapore and North West Europe, was around minus $18 per tonne on Friday,
according to Refinitiv Eikon data.
    The East-West gasoil arbitrage window is currently not profitable, partly due to
higher freight rates, trade sources said.
    "We believe that total global demand for road fuels will fall by 10.5%, or by 5.0
million bpd year-over-year... Road fuel demand in 2019 is estimated to have reached 47.4
million bpd. We now see it reaching only about 42.4 million bpd in 2020," said Per Magnus
Nysveen, a senior partner at energy research firm Rystad Energy.
    "Most of this reduction will take effect in April, which will see road fuel demand
limited to just 31.8 million bpd globally, down from 47.3 million bpd a year ago, a 33%
drop."
    Cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a discount of $2.34 per
barrel to Singapore quotes on Friday, compared with a discount of $2.40 a barrel in the
previous session.
    Meanwhile, cash discounts for jet fuel JET-SIN-DIF narrowed to $4.48 a barrel to
Singapore quotes on Friday, compared with Thursday's $4.52 a barrel that was the widest
cash discount since November 2005.
    Refining profit margins for jet fuel were at $1.98 per barrel below Dubai
crude on Friday, compared with minus $1.26 per barrel on Thursday.
    The jet fuel cracks slumped 246% this week, their steepest weekly decline according to
Refinitiv data that goes back to early 2009.
    
    ARA STOCKS
    - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining
and storage hub STK-GO-ARA rose 8.5% to 2.1 million tonnes in the week to April 23, data
from Dutch consultancy Insights Global showed.
    - ARA jet fuel inventories STK-JET-ARA dropped 9.6% to 622,000 tonnes, the data
showed.
    - Compared with a year earlier, jet fuel stocks were down 17.9%, while gasoil
inventories were 23.2% lower.
    
    TENDERS
    - India's Mangalore Refinery and Petrochemicals Ltd (MRPL) has offered 40,000 tonnes
of jet fuel for May 9-11 loading from the port of New Mangalore.
    - The tender closes on April 27 and has a same-day validity.
    - For more such information, please click
    
    SINGAPORE CASH DEALS
    - No jet fuel trades, no gasoil deals
    - For more information, click
    
    OTHER NEWS
    - Oil prices fell on Friday and headed for their third weekly loss running as
production shutdowns failed to keep pace with sliding demand due to the coronavirus
crisis.
    - U.S. President Donald Trump's plan to fill the U.S. emergency crude oil stockpile
has become the centerpiece of his administration's strategy to shield drillers from a
meltdown in energy demand - but company officials and industry groups say the program has
been too slow and won't be enough to save them.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                          
 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                 22.75    -1.45      -5.99       24.20  GO-SIN
 GO 0.5 Diff                       -5.61     0.06      -1.06       -5.67  GO-SIN-DIF
 Spot Gas Oil 0.25%                22.82    -1.45      -5.97       24.27  GO25-SIN
 GO 0.25 Diff                      -5.54     0.06      -1.07       -5.60  GO25-SIN-DIF
 Spot Gas Oil 0.05%                23.45    -1.39      -5.60       24.84  GO005-SIN
 GO 0.05 Diff                      -4.91     0.12      -2.39       -5.03  GO005-SIN-DIF
 Spot Gas Oil 0.001%               26.02    -1.45      -5.28       27.47  GO10-SIN
 GO 0.001 Diff                     -2.34     0.06      -2.50       -2.40  GO10-SIN-DIF
 Spot Jet/Kero                     16.70    -1.33      -7.38       18.03  JET-SIN
 Jet/Kero Diff                     -4.48     0.04      -0.88       -4.52  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 Amy Caren Daniel)
  
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