November 8, 2019 / 11:03 AM / 3 months ago

Asia Distillates-Jet fuel cracks decline, post biggest weekly drop in 11 weeks

    SINGAPORE, Nov 8 (Reuters) - Asian refining margins for jet fuel plunged on Friday, posting
their biggest weekly decline in more than two months, while cash discounts for the aviation fuel
remained unchanged amid muted buying interest for physical cargoes.
    Refining profit margins, also known as crack spreads, for jet fuel dropped to
$15.59 a barrel over Dubai crude during Asian trading hours, their lowest level since Aug. 23.
The cracks were at $16.22 per barrel a day earlier.
    The jet refining margins have fallen 6.2% this week, their steepest weekly decline in 11
weeks, Refinitiv Eikon data showed.
    The jet fuel market in the region is grappling with abundant supplies, while the aviation
sector is under pressure from slowing economic activity, and Sino-U.S. trade tensions have
dampened air freight demand, traders said.
    "The U.S.-China trade war continues to take its toll on the air cargo industry," Alexandre
de Juniac, chief executive of the International Air Transport Association (IATA) said in a
    Asia-Pacific airlines posted a drop of 4.9% in air freight demand in September, compared
with the same month a year ago, according to the IATA.
    "The US-China and South Korea-Japan trade wars along with the slowdown in the Chinese
economy have significantly impacted this region," it said.
    "More recently, the disruption to operations at Hong Kong International Airport – the
largest cargo hub in the world – added additional pressure." 
    Cash discounts for jet fuel JET-SIN-DIF were at 40 cents per barrel to Singapore quotes on
Friday, unchanged from Thursday and levels not seen since mid-May.
    The jet fuel spot differentials are at their lowest November levels in the last three years,
Refinitiv data showed.
    Meanwhile, cash premiums for gasoil with 10ppm sulphur content GO10-SIN-DIF fell to 53
cents per barrel to Singapore quotes on Friday, compared with 60 cents per barrel on Thursday.
    Refining margins for 10ppm gasoil dove to $15.48 per barrel over Dubai crude
during Asian trade on Friday, a level not seen since July. The crack spreads for the benchmark
gasoil grade were at $16.19 per barrel on Thursday.
    - Global air passenger traffic for September showed demand rose 3.8% compared with the same
month a year ago, the IATA said on Thursday.
    - "September marked the eighth consecutive month of below average demand growth," IATA Chief
Executive Alexandre de Juniac said in a statement.
    "Given the environment of declining world trade activity and tariff wars, rising political
and geopolitical tensions and a slowing global economy, it is difficult to see the trend
reversing in the near term," de Juniac added. 
    - Passenger traffic for Asia-Pacific airlines, which make up more than a third of the global
aviation market, increased 3.6% in September compared with the year-ago period. But growth
remains well below that seen in 2018, the IATA said.
    - Domestic traffic in Japan grew 10.1% in September, higher than a 2% annual increase in
August, the IATA said. 
    - China's domestic traffic rose 8.9% in September compared with the same month in 2018,
while passenger traffic in India rose 1.6% during the same period, IATA data showed.
    - Singapore, the world's largest marine refuelling hub, is pushing the shipping industry to
use cleaner fuels such as liquefied natural gas (LNG) in a bid to reduce the city state's carbon
emissions, the Maritime and Port Authority's (MPA) chief said on Friday.
     - The country is introducing incentives for ships to install engines that use alternative
fuels with lower carbon content such as LNG, and to use LNG bunker during port stay, MPA Chief
Executive Officer Quah Let Hoon said in a speech at an industry event.
    - Incentives will include concessions on certain fees such as port dues, initial
registration fees and tax, an MPA spokesman said. 
    - Gasoil stocks independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and
storage hub STK-GO-ARA dropped 1.3% to 2.6 million tonnes in the week to Nov. 7, data from
Dutch consultancy Insights Global showed.
    - Gasoil stocks fell slightly as demand from inland locations was stable, Insights Global's
Lars van Wageningen said.
    - ARA jet fuel inventories STK-JET-ARA climbed 2.6% to 744,000 tonnes, the data showed.
    - Compared with a year ago, jet fuel stocks were 15.5% higher, while gasoil inventories were
up 7.4%.
    - India's Bharat Petroleum Corporation Ltd (BPCL) was offering 40,000 tonnes of 50ppm
sulphur gasoil loading from Kochi over Nov. 23-24, trade sources said.
    - BPCL was looking to sell another 40,000 tonnes of 50ppm gasoil for Nov. 29-30 loading from
    - The tender closes on Nov. 8 and has a same-day validity.
    - For more such information, please click
    - Separately, BPCL Director (Finance) N. Vijayagopal said on Friday the company will need to
export about 200,000 metric tonnes of diesel each month for remaining part of the year.

    - BPCL is planning to issue term tenders up to March 2020 for sale of diesel, Vijayagopal
said, adding all state-owned oil companies will need to export diesel for rest of the year.
    - No gasoil trades, one jet fuel deal.
    - Total bought 100,000 barrels of jet fuel from Winson Oil for Dec. 4-8 loading at a
discount of 40 cents a barrel to Singapore quotes.
    - For more information, please click
    - China's crude oil imports in October rose 11.5% from a year earlier to a record high,
customs data showed on Friday, as new refineries bolstered demand and small independent plants
maintained throughput amid steady refining margins.
    The customs data also showed the country exported 5 million tonnes of refined oil products
in October, up a quarter from a year earlier, and compared to 5.68 million tonnes in September.

    - Growth in demand for fuel in India is on course to fall to its lowest in at least six
years as the economy slows and after heavy rains impacted gasoil consumption, which accounts for
about two-fifth of the nation's overall fuel use.
    - Crude oil futures fell on Friday amid lingering uncertainty on whether, and when, the
United States and China will agree a long-awaited deal to end their trade dispute, the gloom was
compounded by rising crude inventories in the United States.
 CASH ($/T)              ASIA CLOSE       Change   % Change    Prev Close   RIC
 Spot Gas Oil 0.5%                 71.40    -1.18       -1.63        72.58  GO-SIN
 GO 0.5 Diff                       -3.42    -0.04        1.18        -3.38  GO-SIN-DIF
 Spot Gas Oil 0.25%                71.57    -1.18       -1.62        72.75  GO25-SIN
 GO 0.25 Diff                      -3.25    -0.04        1.25        -3.21  GO25-SIN-DIF
 Spot Gas Oil 0.05%                74.40    -1.18       -1.56        75.58  GO005-SIN
 GO 0.05 Diff                      -0.42    -0.04       10.53        -0.38  GO005-SIN-DIF
 Spot Gas Oil 0.001%               75.35    -1.21       -1.58        76.56  GO10-SIN
 GO 0.001 Diff                      0.53    -0.07      -11.67         0.60  GO10-SIN-DIF
 Spot Jet/Kero                     74.50    -0.68       -0.90        75.18  JET-SIN
 Jet/Kero Diff                     -0.40     0.00        0.00        -0.40  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 Robert Birsel)
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