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 prices. 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 $15 a tonne or below, though it also depends on other factors such as freight rates, according to traders. TRADING HOUSES SEE FURTHER OIL DEMAND DESTRUCTION - Global oil traders Vitol and Trafigura expect a resurgence in coronavirus cases in Europe and the United States to hurt fuel demand although their estimates vary. - Trafigura expects oil demand to fall to around 92 million bpd or below in the short term, while Vitol sees winter demand at 96 million bpd. SINGAPORE CASH DEALS - No jet fuel trade, no gasoil deal. OTHER NEWS - India's gasoil consumption in October rose 6.6% from a year earlier, the first such increase since COVID-19 restrictions were imposed in late March, preliminary data showed on Sunday, signalling a pick-up in industrial activity. - Oil prices fell 4% on Monday on worries that widening coronavirus lockdowns in Europe would weaken fuel demand and amid concerns about turbulence over this week's U.S. presidential election. ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Prev Close RIC Spot Gas Oil 0.5% 37.98 39.85GO 0.5 Diff -1.49 -1.5 Spot Gas Oil 0.25% 38.28 40.15 GO 0.25 Diff -1.19 -1.2 Spot Gas Oil 0.05% 38.48 40.35 GO 0.05 Diff -0.99 -1 Spot Gas Oil 0.001% 39.02 40.87 GO 0.001 Diff -0.46 -0.49 Spot Jet/Kero 37.29 39.18 Jet/Kero Diff -0.56 -0.6 (Reporting by Koustav Samanta; Editing by Amy Caren Daniel)
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