Oil report

Asia Distillates-Gasoil cracks drop; virus resurgence seen dampening demand

    SINGAPORE, Nov 2 (Reuters) - Asian refining margins for 10 ppm gasoil dropped on Monday,
despite weaker raw material crude prices, as traders expect fuel demand to take a hit in the
near term due to a resurgence in coronavirus cases around the world.
    Refining margins or cracks for 10 ppm gasoil plunged to $2.98 a barrel over
Dubai crude during Asian trading hours, down from $3.64 per barrel on Friday.
    The Nov/Dec time spread for the benchmark 10 ppm gasoil in Singapore remained
in a contango structure to trade at a discount of 48 cents a barrel on Monday. Contango tends to
encourage holders of physical barrels to store the product for selling later to secure higher
    Trade sources said the lack of arbitrage opportunities was another key factor for a majority
of supplies being trapped within the region.
    Asia has around 6.6 million barrels of diesel/gasoil in floating storage as of Monday, said
Serena Huang, senior market analyst at oil analytics firm Vortexa.
    Some oil traders are scouting for newly built supertankers to store diesel for the next few
months as they brace for lower demand in Europe amid renewed restrictions aimed at battling the
COVID-19 pandemic.
    "Refiners are loading diesel cargoes on newbuild VLCCs (Very Large Crude Carrier), moving
them to demand centres in Europe, Africa and the U.S. with the optionality of using these
tankers as floating storage if storage arbs turn favourable," Vortexa's analyst Huang said.
    "Renewed lockdowns in Europe is expected to hurt diesel demand, dragging the east-west
arbitrage further south."
    The exchange of futures for swaps (EFS), which determines the gasoil price spread between
Singapore and Northwest Europe, traded around $3 per tonne on Monday, which
typically makes it unworkable for arbitrage shipments.
    Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below,
though it also depends on other factors such as freight rates, according to traders.
    - Global oil traders Vitol             and Trafigura expect a resurgence in coronavirus
cases in Europe and the United States to hurt fuel demand although their estimates vary.

    - Trafigura expects oil demand to fall to around 92 million bpd or below in the short term,
while Vitol sees winter demand at 96 million bpd.
    - No jet fuel trade, no gasoil deal.
    - India's gasoil consumption in October rose 6.6% from a year earlier, the first such
increase since COVID-19 restrictions were imposed in late March, preliminary data showed on
Sunday, signalling a pick-up in industrial activity.
    - Oil prices fell 4% on Monday on worries that widening coronavirus lockdowns in Europe
would weaken fuel demand and amid concerns about turbulence over this week's U.S. presidential

 CASH ($/T)            ASIA CLOSE     Prev Close  RIC
 Spot Gas Oil 0.5%             37.98       39.85  GO-SIN
 GO 0.5 Diff                   -1.49        -1.5  GO-SIN-DIF
 Spot Gas Oil 0.25%            38.28       40.15  GO25-SIN
 GO 0.25 Diff                  -1.19        -1.2  GO25-SIN-DIF
 Spot Gas Oil 0.05%            38.48       40.35  GO005-SIN
 GO 0.05 Diff                  -0.99          -1  GO005-SIN-DIF
 Spot Gas Oil 0.001%           39.02       40.87  GO10-SIN
 GO 0.001 Diff                 -0.46       -0.49  GO10-SIN-DIF
 Spot Jet/Kero                 37.29       39.18  JET-SIN
 Jet/Kero Diff                 -0.56        -0.6  JET-SIN-DIF
 (Reporting by Koustav Samanta; Editing by Amy Caren Daniel)