November 21, 2019 / 10:45 AM / 19 days ago

Asia Distillates-Gasoil cash premiums drop to lowest in over two months

    SINGAPORE, Nov 21 (Reuters) - Asia's cash premiums for 10 ppm gasoil dropped for a third
consecutive session on Thursday to their lowest in more than two months as the region continued
to grapple with ample supplies.
    Cash premiums for gasoil with 10 ppm sulphur content GO10-SIN-DIF inched lower by a cent
on Thursday to 20 cents per barrel to Singapore quotes, a level not seen since Sept. 19.
    Refining margins, also known as cracks, for 10 ppm gasoil dropped to $13.86 a
barrel over Dubai crude during Asian trade, their weakest since May 30. Cracks for the benchmark
gasoil grade were at $14.13 per barrel a day earlier.
    Gasoil profit margins, which have shed 22% in the last month, are expected to get a boost in
the coming weeks as the shipping industry switches to cleaner marine fuels starting in January.
    New rules from the International Maritime Organization (IMO) require shippers to reduce the
sulphur content in fuels used in their vessels from next year, and one way to do so is to switch
to marine gasoil (MGO).
    But market participants increasingly believe very low sulphur fuel oil (VLSFO), which is a
cheaper alternative, would eat into the demand pool for MGO as a replacement for high-sulphur
fuel.
    "Incremental MGO demand for 2020 will struggle to grow much beyond 1 million barrels per day
next year amid surprisingly strong VLSFO demand," consultancy Energy Aspects said in a note.
    Industry analysts were expecting IMO 2020 to boost gasoil demand between a range of 1.4
million to 2 million barrels per day a couple of months ago.
    "By March 2020, the impact of the IMO 2020 transition should be well known ... While the
short term looks set to be buffeted by long liquidation and fears about growth, the market may
become more investable soon," according to analysts at Energy Aspects. 
    Meanwhile, jet fuel cracks dropped to $13.73 per barrel over Dubai crude on
Thursday, compared with $14.19 a barrel on Wednesday.
    Cash discounts for jet fuel JET-SIN-DIF narrowed by three cents to 58 cents per barrel to
Singapore quotes. 
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks rose 14.4% to 11.6 million barrels in the week
ended Nov. 20, Enterprise Singapore data showed.
    - Weekly middle distillate inventories have averaged 11.2 million barrels so far this year,
having averaged 9.6 million barrels a week in 2018, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 5% higher year-on-year.
    - Light distillate stocks climbed 169,000 barrels to a two-week high of 10.8 million barrels
in the week ended on Wednesday, while fuel oil stocks rose 475,000 barrels to a two-week high of
20.8 million barrels, Enterprise Singapore data showed.
    
    EIA INVENTORIES
    - U.S. crude stocks rose last week even as refineries hiked output, while gasoline stocks
increased and distillate inventories fell, the Energy Information Administration said on
Wednesday.
    - Crude inventories rose by 1.4 million barrels in the week to Nov. 15,
compared with expectations for an increase of 1.5 million barrels.
    - Refinery crude runs rose by 519,000 barrels per day, EIA data showed.
Refinery utilization rates rose by 1.7 percentage points.
    - Distillate stockpiles, which include diesel and heating oil, fell by 1
million barrels, versus expectations for a 732,000-barrel drop, the EIA data showed.

    TENDERS
    - India's Mangalore Refinery and Petrochemicals Ltd (MRPL) was looking to sell 40,000 tonnes
of jet fuel for loading over Dec. 17-19 from the port of New Mangalore.
    - The tender closes on Nov. 25 and will remain valid until Nov. 26.
    - For more such information, please click
    
    SINGAPORE CASH DEALS
    - One gasoil trade, no jet fuel deals.
    - Singapore trader Hin Leong sold 150,000 barrels of 10ppm gasoil to Total for Dec. 8-12
loading at a premium of 20 cents a barrel Singapore quotes.
    - For more information, please click
    
    OTHER NEWS
    - Oil prices edged lower as fresh tensions between the United States and China over ongoing
protests in Hong Kong fuelled concern that a long hoped-for deal to end a trade war between the
world's top two economies may be further delayed.
    - President Vladimir Putin said on Wednesday that Russia and OPEC have "a common goal" of
keeping the oil market balanced and predictable, and Moscow will continue cooperation under the
global supply curbs deal.
    
    ASSESSMENTS    
 MID-DISTILLATES                                                                         
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               70.86     1.52       2.19       69.34  GO-SIN
 GO 0.5 Diff                     -3.29     0.18      -5.19       -3.47  GO-SIN-DIF
 Spot Gas Oil 0.25%              71.15     1.52       2.18       69.63  GO25-SIN
 GO 0.25 Diff                    -3.00     0.18      -5.66       -3.18  GO25-SIN-DIF
 Spot Gas Oil 0.05%              73.78     1.34       1.85       72.44  GO005-SIN
 GO 0.05 Diff                    -0.37     0.00       0.00       -0.37  GO005-SIN-DIF
 Spot Gas Oil 0.001%             74.34     1.32       1.81       73.02  GO10-SIN
 GO 0.001 Diff                    0.20    -0.01      -4.76        0.21  GO10-SIN-DIF
 Spot Jet/Kero                   73.66     1.42       1.97       72.24  JET-SIN
 Jet/Kero Diff                   -0.58     0.03      -4.92       -0.61  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 David Evans)
  
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