July 27, 2020 / 10:58 AM / 8 days ago

Asia Distillates-Gasoil cash premiums fall amid concerns over excess supplies

    SINGAPORE, July 27 (Reuters) - Asia's cash premiums for 10 ppm gasoil dropped on Monday,
hurt by muted buying interest for physical cargoes, while traders were concerned higher exports
from India and China in the coming weeks could dampen the regional market with additional
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF fell to 32 cents a barrel to Singapore
quotes, the lowest level in more than six weeks. They were at a premium of 46 cents a barrel on
    "China's gasoline and gasoil exports have rebounded this month, compared to the lows seen in
May/June, as strong surplus and narrower domestic margins prompted refiners to sell more cargoes
to the regional market," said Serena Huang, Asia lead analyst at oil analytics firm Vortexa.
    Meanwhile, India's gasoil exports are projected to close at around 2.1 million tonnes this
month, compared with 1.81 million tonnes in June, according to Refinitiv oil research
    The higher export volumes hitting the region would likely create a supply overhang as
arbitrage shipments to the West are currently not workable, while a resurgence in coronavirus
infections in many places have curbed the pace of demand recovery, market watchers said.
    The front-month time spread for 10 ppm gasoil in Singapore narrowed its
backwardated structure to trade at a premium of 1 cent a barrel on Monday, compared with 13
cents per barrel a week earlier.
    In backwardation, the prompt-month contract is more expensive than subsequent months, which
makes it uneconomical to store the product and leads to a drawdown in inventories.
    But a narrowing backwardation indicates the market may flip back into contango -- the
opposite of backwardation -- that tends to encourage holders of physical barrels to store the
product for selling later to secure higher prices.
    Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content
slipped 3 cents to $6.75 a barrel over Dubai crude during Asian trading hours on Monday, despite
weaker raw material crude prices. 

    - No gasoil deals, no jet fuel trades
    - India's oil imports fell in June, hitting their lowest since October 2011, as refiners
curbed purchases due to maintenance turnarounds and weaker fuel demand, data from industry
sources showed.
    - Oil prices edged lower on Monday as rising coronavirus cases and tensions between the
United States and China pushed investors toward safe-haven assets.
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               48.57     0.09       0.19       48.48  GO-SIN
 GO 0.5 Diff                     -0.94    -0.01       1.08       -0.93  GO-SIN-DIF
 Spot Gas Oil 0.25%              49.21     0.09       0.18       49.12  GO25-SIN
 GO 0.25 Diff                    -0.30    -0.01       3.45       -0.29  GO25-SIN-DIF
 Spot Gas Oil 0.05%              49.72    -0.11      -0.22       49.83  GO005-SIN
 GO 0.05 Diff                     0.21    -0.21     -50.00        0.42  GO005-SIN-DIF
 Spot Gas Oil 0.001%             49.82    -0.05      -0.10       49.87  GO10-SIN
 GO 0.001 Diff                    0.32    -0.14     -30.43        0.46  GO10-SIN-DIF
 Spot Jet/Kero                   44.17     0.33       0.75       43.84  JET-SIN
 Jet/Kero Diff                   -0.30     0.02      -6.25       -0.32  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 Aditya Soni)
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