November 13, 2019 / 10:46 AM / 3 months ago

Asia Distillates-Gasoil spot premiums dwindle, time-spread narrows

    SINGAPORE, Nov 13 (Reuters) - Asia's cash premiums for 10 ppm gasoil dropped on Wednesday,
plunging to their lowest in over 1-1/2 months, hurt by sloppy buying interest for physical
cargoes amid plentiful supplies, while prompt-month spread for the industrial fuel narrowed its
    Cash premiums for gasoil with 10 ppm sulphur content GO10-SIN-DIF fell for a seventh
consecutive session to 30 cents per barrel to Singapore quotes, a level not seen since Sept. 25.
They were at a premium of 39 cents a barrel on Tuesday.
    The prompt-month time spread for 10 ppm gasoil on Wednesday traded at a
premium of 15 cents a barrel, their narrowest since Sept. 13, Refinitiv Eikon data showed. The
spread was at 39 cents per barrel on Tuesday.
    In a backwardated market, the prompt-month contract is more expensive than subsequent
months, which makes it uneconomical to store the product and leads to a drawdown in inventories.
It is usually seen as a sign that there is demand for the product and the market is rebalancing.
    But a narrowing backwardation indicates the market may flip back into contango -- the
opposite of backwardation -- that tends to encourage holders of physical barrels to store the
product for selling later to secure higher prices.
    Refining margins, also known as cracks, for 10 ppm gasoil continued to drop on
Wednesday to be at $14.27 per barrel over Dubai crude during Asian trading hours, their lowest
levels in five months.  The gasoil cracks were at $14.71 a barrel on Tuesday.
    Meanwhile, refining margins for jet fuel slumped to $14.61 per barrel over
Dubai crude on Wednesday, their lowest in more than four months. The jet cracks were at $15.05
per barrel on Tuesday.
    Cash differentials for jet fuel JET-SIN-DIF were at a discount of 59 cents per barrel to
Singapore quotes on Wednesday, compared with a 56-cent discount in the previous session.
    The physical jet fuel market in the Singapore trading window remained muted with no bids or
deals on Wednesday.
    - China's Sinopec Corp plans to build a fleet of 100 barges over the next three years to
supply marine fuel compliant with new global emission standards, said a Chinese shipping
executive with direct knowledge of the matter.
    - In what would be one of the top Asian refiner's biggest shipping investments, Sinopec
hopes the fleet would serve its stated ambition to become a top regional supplier of very low
sulfur fuel oil (VLSFO).
    - Burning VLSFO is one of the options for shipowners when they have to switch to fuel that
contains 0.5% sulphur from the current 3.5% in January under a mandate by the International
Maritime Organization (IMO).
    - Middle-distillate inventories in the Fujairah Oil Industry Zone rose 4.7% from a week
earlier to 3.2 million barrels in the week to Nov. 11, data via S&P Global Platts showed.

    - Stocks of middle distillates in the Fujairah oil hub have averaged 2.2 million barrels so
far in 2019, Reuters calculations showed. This compares with a weekly average of 2.8 million
barrels in 2018.
    - Compared with year-ago levels, weekly Fujairah middle distillate stocks were 6% higher.
    - One gasoil trade, no jet fuel deals.
    - Singapore trader Hin Leong bought 150,000 barrels of 10ppm gasoil from PetroChina for Dec.
9-13 loading at a premium of 20 cents a barrel to the balance of November Singapore quotes.
    - For more information, please click
    - Global oil demand growth is expected to slow from 2025 as fuel efficiency improves and the
use of electrified vehicles increases but is unlikely to peak in the next two decades, the
International Energy Agency (IEA) said on Wednesday.
    - Oil prices fell on Wednesday as prospects for a trade deal between the United States and
China faded, weighing on the outlook for the global economy and energy demand.
    -  Saudi Aramco, the world's top oil exporter, has appointed its first woman head of an
overseas office, two sources with knowledge of the matter said on Wednesday.
    Marwa al-Khuzaim will helm Aramco Asia Singapore from December, taking over from Nader
al-Arfaj, they said.
 CASH ($/T)             ASIA CLOSE         Change   % Change    Prev Close  RIC
 Spot Gas Oil 0.5%                  70.50    -1.31       -1.82       71.81  GO-SIN
 GO 0.5 Diff                        -3.60    -0.07        1.98       -3.53  GO-SIN-DIF
 Spot Gas Oil 0.25%                 70.64    -1.31       -1.82       71.95  GO25-SIN
 GO 0.25 Diff                       -3.46    -0.07        2.06       -3.39  GO25-SIN-DIF
 Spot Gas Oil 0.05%                 73.58    -1.31       -1.75       74.89  GO005-SIN
 GO 0.05 Diff                       -0.52    -0.07       15.56       -0.45  GO005-SIN-DIF
 Spot Gas Oil 0.001%                74.41    -1.33       -1.76       75.74  GO10-SIN
 GO 0.001 Diff                       0.30    -0.09      -23.08        0.39  GO10-SIN-DIF
 Spot Jet/Kero                      73.61    -1.16       -1.55       74.77  JET-SIN
 Jet/Kero Diff                      -0.59    -0.03        5.36       -0.56  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 Rashmi Aich)
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