March 5, 2020 / 10:33 AM / a month ago

Asia Distillates-Jet fuel cracks slip as coronavirus hammers aviation demand

    SINGAPORE, March 5 (Reuters) - Asian refining margins for jet fuel crawled lower on
Thursday, lingering close to a more-than-10-year low touched last week, as the regional aviation
sector continued to get hammered amid the coronavirus outbreak.
    Refining margins, also known as cracks, for jet fuel inched down to $6.79 per
barrel over Dubai crude during Asian trade on Thursday, 2 cents lower from a day earlier. The
cracks hit $6.04 a barrel last Thursday, the lowest since mid-2009.
    The jet fuel market, which has already suffered unprecedented losses this year due to the
virus, is expected to come under further pressure in coming months as global airlines suspend
more flights and more passengers cancel travel plans due to the spreading outbreak.
    Passenger traffic for Asia-Pacific airlines in January climbed 2.5% on-year, the slowest
growth since early 2013, the International Air Transport Association (IATA) said in statement on
Wednesday.
    "January was just the tip of the iceberg in terms of the traffic impact we are seeing owing
to the Covid-19 outbreak, given that major travel restrictions in China did not begin until Jan.
23. Nevertheless, it was still enough to cause our slowest traffic growth in nearly a decade,"
IATA Chief Executive Alexandre de Juniac said.
    Meanwhile, air cargo demand for Asia-Pacific airlines decreased 5.9% in January
year-on-year, the IATA said, adding the impact from coronavirus is expected to affect February's
performance.
    Cash discounts for jet fuel JET-SIN-DIF were at 20 cents per barrel to Singapore quotes on
Thursday, compared with a discount of 32 cents per barrel on Wednesday.
    Cash differentials for 10 ppm gasoil GO10-SIN-DIF flipped into a discount of 8 cents per
barrel to Singapore quotes on Thursday, compared with a narrow premium of 2 cents per barrel in
the previous session.
    Refining margins for gasoil with 10 ppm sulphur content fell to $8.98 per
barrel over Dubai crude on Thursday, down from $9.03 per barrel on Wednesday.
    
    AIR PASSENGER DATA - IATA
    - IATA also said global air passenger traffic for January showed that demand rose 2.4%
against the same month a year earlier, the lowest monthly increase since April 2010.
    - Among domestic regional markets, China's passenger traffic fell 6.8% in January,
reflecting the impact of flight cancellations and travel restrictions related to the
coronavirus, the association added.
    
    JANUARY AIR FREIGHT DATA - IATA
    - Global air freight demand dropped 3.3% in January, compared with the same period in 2019,
the IATA said on Wednesday.
    - January marked the tenth consecutive month of year-on-year declines in cargo volumes,
according to the IATA.
    - "There was optimism that an easing of U.S.-China trade tensions would give the sector a
boost in 2020," de Juniac said.
    "But that has been overtaken by the Covid-19 outbreak, which has severely disrupted global
supply chains, although it did not have a major impact on January's cargo performance," he
added.
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks rose 4.3% to a five-month high of 11.9 million
barrels in the week ended March 4, Enterprise Singapore data showed.
    - Weekly middle distillate inventories have averaged 10.99 million barrels so far in 2020,
compared with 11.1 million barrels in 2019, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 2.8% lower year-on-year.
    
    SINGAPORE CASH DEALS
    - Three gasoil trades, two jet fuel deals
    - For more information, click
    
    OTHER NEWS
    - Saudi Arabia and other OPEC members struggled on Wednesday to win support from Russia to
join them in additional oil output cuts in a bid to prop up prices which have tumbled by a fifth
this year because of the coronavirus outbreak.
    - U.S. distillate stockpiles, which include diesel and heating oil, fell by 4 million
barrels in the week to 134.5 million barrels, versus expectations for a 1.9 million-barrel drop,
data from the U.S. Energy Information Administration showed.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                        
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               57.96    -0.09      -0.16       58.05  GO-SIN
 GO 0.5 Diff                     -2.09    -0.07       3.47       -2.02  GO-SIN-DIF
 Spot Gas Oil 0.25%              58.23    -0.09      -0.15       58.32  GO25-SIN
 GO 0.25 Diff                    -1.82    -0.07       4.00       -1.75  GO25-SIN-DIF
 Spot Gas Oil 0.05%              58.92    -0.09      -0.15       59.01  GO005-SIN
 GO 0.05 Diff                    -1.13    -0.07       6.60       -1.06  GO005-SIN-DIF
 Spot Gas Oil 0.001%             59.97    -0.12      -0.20       60.09  GO10-SIN
 GO 0.001 Diff                   -0.08    -0.10    -500.00        0.02  GO10-SIN-DIF
 Spot Jet/Kero                   57.51     0.20       0.35       57.31  JET-SIN
 Jet/Kero Diff                   -0.20     0.12     -37.50       -0.32  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 Sherry Jacob-Phillips)
  
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