July 22, 2020 / 10:49 AM / 15 days ago

Asia Distillates-Gasoil cash premiums drop, front-month spread narrows

    SINGAPORE, July 22 (Reuters) - Asia's cash premiums for 10 ppm gasoil fell on Wednesday,
hurt by weaker buying interest for physical cargoes, while the front-month spread for the
industrial fuel narrowed its backwardated structure.
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF were at 62 cents a barrel to Singapore
quotes, down from a 70-cent premium a day earlier.
    The August/September time spread for 10 ppm gasoil in Singapore traded at a
premium of 11 cents a barrel on Wednesday, compared with 13 cents in the previous session,
Refinitiv data showed.
    The current lack of arbitrage opportunities is keeping gasoil supplies locked within the
region, while a renewed wave in coronavirus infections leading to reimposed lockdown measures in
many places is dampening hopes for demand recovery, market watchers said.
    The exchange of futures for swaps (EFS), which determines the gasoil price spread between
Singapore and Northwest Europe, was around minus $10 per tonne on Wednesday,
Refinitiv Eikon data showed.
    Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below,
though it depends on other factors such as freight rates as well, according to traders.
    "More exports from China and India will be trapped within the region," said Rui Hou, analyst
at Wood Mackenzie.
    "However, the sluggish demand for diesel/gasoil due to weaker economic recovery makes it
hard to 'absorb' the additional supplies, forcing Indian and Chinese refineries to keep
utilisation minimal."
    Refining margins or cracks for gasoil with 10 ppm sulphur content slipped 8
cents to $7.14 a barrel over Dubai crude during Asian trading hours on Wednesday.
    
    INVENTORIES
    - Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 8.6% to 3.9
million barrels in the week ended July 20, data via S&P Global Platts showed.
    - The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020, compared
with a weekly average of 2.4 million barrels in 2019, Reuters calculations showed.
    - Meanwhile, U.S. distillate fuel inventories fell by 1.4 million barrels, in line with
expectations, data from industry group the American Petroleum Institute (API) showed on Tuesday.

    
    SINGAPORE CASH DEALS
    - Three gasoil deals, no jet fuel trades

    ASSESSMENTS    
 MID-DISTILLATES                                                                        
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                49.75     0.50       1.02       49.25  GO-SIN
 GO 0.5 Diff                      -0.90    -0.01       1.12       -0.89  GO-SIN-DIF
 Spot Gas Oil 0.25%               50.39     0.50       1.00       49.89  GO25-SIN
 GO 0.25 Diff                     -0.26    -0.01       4.00       -0.25  GO25-SIN-DIF
 Spot Gas Oil 0.05%               51.20     0.50       0.99       50.70  GO005-SIN
 GO 0.05 Diff                      0.55    -0.01      -1.79        0.56  GO005-SIN-DIF
 Spot Gas Oil 0.001%              51.27     0.43       0.85       50.84  GO10-SIN
 GO 0.001 Diff                     0.62    -0.08     -11.43        0.70  GO10-SIN-DIF
 Spot Jet/Kero                    45.36     0.22       0.49       45.14  JET-SIN
 Jet/Kero Diff                    -0.38     0.03      -7.32       -0.41  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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