May 11, 2020 / 10:13 AM / a month ago

Asia Distillates-Gasoil cracks edge higher; market still weak

    SINGAPORE, May 11 (Reuters) - Asian refining margins for 10 ppm gasoil rose on Monday, but
remained near their lowest seasonal levels on record due to plentiful supplies and subdued
demand for the transportation fuel amid extended lockdowns in major regional markets.
    Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content
were at $4.37 a barrel over Dubai crude during Asian trading hours on Monday, compared with
$3.37 a barrel on Friday.
    Cracks for the benchmark gasoil grade are currently at their weakest levels for this time of
the year, according to Refinitiv Eikon data that goes back to 2014. The current level is 70%
lower than the historical average for May seasonal cracks.
    Coronavirus lockdowns in markets such as India and Indonesia continue to hurt gasoil demand,
trade sources said, adding run cuts at regional refineries have not been able to rein in
oversupply.
    Cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a discount of $1.22 per barrel
to Singapore quotes on Monday, compared with $1.37 per barrel on Friday. 
    The exchange of futures for swaps (EFS), which determines the gasoil price spread between
Singapore and Northwest Europe, was around minus $1 per tonne on Monday, Refinitiv
Eikon data showed. This typically makes the arbitrage to ship cargoes from east to west
unworkable.
    Arbitrage is usually profitable when the EFS trades at about minus $18 a tonne or below,
though it depends on other factors such as freight rates as well, traders said.
    Meanwhile, refining margins for jet fuel were at a discount of $1.13 a barrel
to Dubai crude on Monday, compared with minus $4.49 a barrel on Friday.
    Cash differentials for jet fuel JET-SIN-DIF were at a discount of $2.28 a barrel to
Singapore quotes on Monday. They were at a discount of $3.39 a barrel on Friday.
    
    CHINA ISSUES FUEL EXPORT QUOTAS FOR 2020
    - China has issued 28 million tonnes of refined fuel export quotas in the second allotment
for this year, little changed from the first batch of 27.99 million tonnes issued last December,
according to four sources with knowledge of the matter.
    - The quotas were released last week to five state oil companies, PetroChina, Sinopec, China
National Offshore Oil Corp, Sinochem Group and China National Aviation Fuel Corp, the sources
said.
    
    INDIA FUEL DEMAND
    - India's fuel demand dipped 45.8% in April from a year earlier, as a nationwide lockdown
and travel curbs to combat the spread of novel coronavirus eroded economic activity. Consumption
of fuel, a proxy for oil demand, totalled 9.93 million tonnes - its lowest since 2007,
government data showed on Saturday.
    - Consumption of diesel, which is widely used for transportation as well as for irrigation
needs in India, slumped 56% in April year-over-year at 3.25 million tonnes. This compares with
5.65 million tonnes in March 2020.
    - Domestic jet fuel sales in April were at about 60,000 tonnes, compared with 480,000 tonnes
in March, and 650,000 tonnes in Arpil 2019.
    
    SINGAPORE CASH DEALS
    - No jet fuel trades, no gasoil deals
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    OTHER NEWS
    - Oil prices slipped more than 1% on Monday as concern over a persistent glut and economic
gloom caused by the coronavirus pandemic cancelled out support from supply cuts at some of the
world's top producers.
    - Investors are rummaging through battered energy stocks to play a potential rebound in oil
prices, just weeks after crude futures traded below zero for the first time ever.
    It's a high-stakes game. The months-long plunge in oil has dragged valuations in the sector
to their lowest levels in decades, according to some measures, raising companies' allure to
bargain hunters. Yet bankruptcies in the oil patch are expected to grow, and choosing the wrong
stock could leave a portfolio with outsized losses.
    
    ASSESSMENTS    
 MID-DISTILLATES                                                                           
 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                 30.40     1.63       5.67       28.77  GO-SIN
 GO 0.5 Diff                       -4.42     0.13      -2.86       -4.55  GO-SIN-DIF
 Spot Gas Oil 0.25%                30.89     1.63       5.57       29.26  GO25-SIN
 GO 0.25 Diff                      -3.93     0.13      -3.20       -4.06  GO25-SIN-DIF
 Spot Gas Oil 0.05%                31.00     1.63       5.55       29.37  GO005-SIN
 GO 0.05 Diff                      -3.82     0.13      -3.29       -3.95  GO005-SIN-DIF
 Spot Gas Oil 0.001%               33.60     1.65       5.16       31.95  GO10-SIN
 GO 0.001 Diff                     -1.22     0.15     -10.95       -1.37  GO10-SIN-DIF
 Spot Jet/Kero                     26.17     5.27      25.22       20.90  JET-SIN
 Jet/Kero Diff                     -2.28     1.11     -32.74       -3.39  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 Aditya Soni)
  
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