March 2, 2020 / 11:18 AM / 3 months ago

Asia Distillates-Jet fuel cracks gain; market remains wary of demand recovery

    SINGAPORE, March 2 (Reuters) - Asian refining margins for jet fuel rose on Monday, but
traders remained concerned the aviation fuel market would likely remain under pressure over the
next couple of months as global airlines suspend flights due to the coronavirus epidemic.
    Refining profit margins, also known as cracks, for jet fuel rose to $7.55 per
barrel over Dubai crude during Asian trading hours, compared with $7.10 a barrel on Friday.
    Cracks for the aviation fuel in Singapore have dropped over 51% in the first two months of
2020, their biggest drop for the Jan-Feb period, according to Refinitiv data going back to as
far as April 2009.
    The virus outbreak originated in China and later spread to more than 50 countries, leading
to flight cancellations that slashed demand for the aviation fuel.
    "As the coronavirus infections increasingly decouple from developments in China - with
Korea, Brazil, Iran, Italy and others having reported deteriorating situations - airlines have
responded by grounding further flights," JBC Energy said.
    "While we favour a relative recovery through H2, implying also that the wider economy will
bounce back from the current disruption, sustained growth in jet/kero demand in 2020 is likely
to remain elusive," the Vienna-based consultancy said in a note on Friday.
    Many industry meetings and events have been called off, with companies limiting travel to
protect employees.
    Cash differentials for jet fuel JET-SIN-DIF were at a discount of 2 cents per barrel to
Singapore quotes on Monday, compared with a discount of 1 cent per barrel on Friday.
    Meanwhile, cash premiums for 10 ppm gasoil GO10-SIN-DIF were at 31 cents per barrel to
Singapore quotes on Monday, compared with a premium of 27 cents per barrel on Friday.
    Refining margins for gasoil with 10 ppm sulphur content rose to $9.61 per
barrel over Dubai crude on Monday, up from $9.39 per barrel on Friday.
    
    TENDERS
    - Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking a combined cargo of 130,000
barrels of 500ppm gasoil and 160,000 barrels of jet fuel for delivery to Dolphin Tanker Berth
and SPM Muthurajawela, Colombo, over March 31-April 4 on a DAP basis.
    - The tender closes on March 3 and will be held valid for three days.
    - For more such information, please click
    
    SINGAPORE CASH DEALS
    - One gasoil trade, one jet fuel deal
    - BP sold 185,000 barrels of 10 ppm gasoil to Unipec for March 17-21 loading at a premium of
30 cents a barrel to Singapore quotes
    - Singapore trader Hin Leong bought 100,000 barrels of jet fuel from BP for March 28-April 1
loading at a discount of 10 cents a barrel to Singapore quotes
    - For more information, click
    
    OTHER NEWS
    - Oil prices jumped more than 3% on Monday, reversing an earlier fall to multi-year lows as
hopes of a deeper cut in output by the OPEC and stimulus from central banks countered worries of
weak demand from the coronavirus outbreak.
    - U.S. refining margins plunged last week on demand fears due to the coronavirus outbreak,
hurting an already weak distillate market and reversing gasoline margins that been unexpectedly
strong in recent weeks.
    Distillate margins HOc1-CLc1 fell as low as $13.44 a barrel on Thursday, lowest for this
time of year since 2016, according to Refinitiv Eikon data. Usually, margins on distillates are
stronger this time of year, boosted by U.S. heating oil usage. The spread rebounded to $17.13 on
Friday, still the weakest since 2017.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                         
 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                 58.48     2.08       3.69       56.40  GO-SIN
 GO 0.5 Diff                       -1.90     0.04      -2.06       -1.94  GO-SIN-DIF
 Spot Gas Oil 0.25%                58.75     2.08       3.67       56.67  GO25-SIN
 GO 0.25 Diff                      -1.63     0.04      -2.40       -1.67  GO25-SIN-DIF
 Spot Gas Oil 0.05%                59.44     2.08       3.63       57.36  GO005-SIN
 GO 0.05 Diff                      -0.94     0.04      -4.08       -0.98  GO005-SIN-DIF
 Spot Gas Oil 0.001%               60.69     2.08       3.55       58.61  GO10-SIN
 GO 0.001 Diff                      0.31     0.04      14.81        0.27  GO10-SIN-DIF
 Spot Jet/Kero                     58.00     1.89       3.37       56.11  JET-SIN
 Jet/Kero Diff                     -0.02    -0.01     100.00       -0.01  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 Arun Koyyur)
  
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