March 19, 2020 / 11:43 AM / 13 days ago

Asia Distillates-Jet fuel cracks slip below $2/bbl, spot discounts widest since Nov

    SINGAPORE, March 19 (Reuters) - Asian refining margins for jet fuel dropped below $2 a
barrel over Dubai crude on Thursday, while cash differentials plunged to their widest discounts
so far this year as coronavirus continued to hammer the global aviation sector.
    Refining margins, also known as cracks, for jet fuel plunged to $1.72 per
barrel over Dubai crude during Asian trade on Thursday, a fresh low according to Refinitiv Eikon
data that goes back as far as March 2009.
    Cracks for the aviation fuel in Singapore, which were at $2.12 a barrel on Wednesday, have
slumped nearly 80% so far this week.
    The already-battered jet fuel refining margins in Asia are expected to remain under pressure
in coming months as global airlines are forced to suspend flights and more passengers cancel
travel plans due to the widening spread of the virus.
    "For jet fuel, the situation keeps developing... the worst has not yet arrived," said a
middle distillates trader, adding that he expects the market would take at least 2-3 months more
to find some support.
    Traders are concerned jet fuel would be the last to recover even when the economy starts
picking up as the virus gets contained eventually, but travel demand would likely not return
soon.
    Cash discounts for jet fuel JET-SIN-DIF were at 63 cents per barrel to Singapore quotes on
Thursday, the widest since Nov. 19. They were at a discount of 38 cents per barrel on Wednesday.
    Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a discount of 16
cents per barrel to Singapore quotes on Thursday, as against a 1-cent discount a day earlier.
    Cracks for gasoil with 10 ppm sulphur content rose to $8.82 per barrel over
Dubai crude on Thursday, up from $8.23 per barrel on Wednesday.
    
    OIL MAJORS LOOK TO STORE JET FUEL AT SEA
    - Major oil companies including BP and Shell are preparing to take the rare step of storing
jet fuel at sea as the coronavirus outbreak disrupts airline activity globally, while refiners
are shifting to diesel because of the poor margins associated with jet fuel production.

    - Storing jet fuel at sea, however, is something of a last resort. The product is sensitive
to contamination and degrades more quickly than other refined fuels and especially crude oil, so
after a few months, it no longer can be used for aviation, according to analysts.
    
    AIRLINE INDUSTRY TURMOIL DEEPENS
    - Airline industry turmoil deepened on Thursday as Qantas Airways Ltd told most of
its 30,000 employees to take leave. In India, government sources told Reuters that the
government was planning a rescue package of up to $1.6 billion to aid carriers battered by
coronavirus.
    - The U.N.'s International Civil Aviation Organization called on governments to ensure cargo
operations were not disrupted to maintain the availability of critical medicine and equipment
such as ventilators, masks, and other health and hygiene items that will help reduce the spread
of the coronavirus.
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks rose 7.5% to a more than five-month high of
12.3 million barrels in the week ended March 18, Enterprise Singapore data showed.
    - Weekly middle distillate inventories have averaged 11.14 million barrels so far in 2020,
compared with 11.11 million barrels in 2019, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 13.4% higher year-on-year.
    
    EIA INVENTORIES
    - Crude inventories rose by 2 million barrels in the week ended March 13 to 453.7 million
barrels, the highest since July 2019, the U.S. Energy Information Administration said. Analysts
in a Reuters poll forecast a 3.3 million-barrel rise.
    - Distillate stockpiles, which include diesel and heating oil, fell by 2.9
million barrels in the week to 125.12 million barrels, versus expectations for a 2
million-barrel drop, the EIA data showed.
    
    SINGAPORE CASH DEALS
    - Six gasoil trades, no jet fuel deals
    - For more information, click
    
    OTHER NEWS
    - After a frantic week that sent crude oil freight rates to record highs amid a bookings
bonanza to ship Saudi oil to the world, rates are now easing as charterers balk at the nosebleed
charges and await Saudi volume plans for April, shipping sources said.
    - Oil prices rose nearly 10% on Thursday after a three-day selloff drove them to their
lowest levels in almost two decades as demand plummeted due to the coronavirus and supplies
surged in a fight for market share between Russia and Saudi Arabia.

    ASSESSMENTS
 MID-DISTILLATES                                                                          
 CASH ($/T)               ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                  34.87    -1.76      -4.80       36.63  GO-SIN
 GO 0.5 Diff                        -2.04    -0.09       4.62       -1.95  GO-SIN-DIF
 Spot Gas Oil 0.25%                 35.11    -1.76      -4.77       36.87  GO25-SIN
 GO 0.25 Diff                       -1.80    -0.09       5.26       -1.71  GO25-SIN-DIF
 Spot Gas Oil 0.05%                 35.80    -1.76      -4.69       37.56  GO005-SIN
 GO 0.05 Diff                       -1.11    -0.09       8.82       -1.02  GO005-SIN-DIF
 Spot Gas Oil 0.001%                36.75    -1.82      -4.72       38.57  GO10-SIN
 GO 0.001 Diff                      -0.16    -0.15    1500.00       -0.01  GO10-SIN-DIF
 Spot Jet/Kero                      29.02    -2.92      -9.14       31.94  JET-SIN
 Jet/Kero Diff                      -0.63    -0.25      65.79       -0.38  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 Shailesh Kuber)
  
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