December 23, 2019 / 10:33 AM / a month ago

Asia Distillates-Gasoil cash premiums rise, front-month spread widens

    SINGAPORE, Dec 23 (Reuters) - Asia's cash differentials for 10 ppm gasoil edged higher on
Monday, buoyed by expectations of firmer buying interests ahead of a switch to cleaner marine
fuels starting January.
    Traders were hopeful the first half of 2020 will bring a major boost for marine gasoil (MGO)
demand as new International Maritime Organization (IMO) rules prohibit ships from using fuels
containing more than 0.5% sulphur, compared with 3.5% through the end of December. 
    Cash premiums for gasoil with 10 ppm sulphur content GO10-SIN-DIF climbed to 78 cents per
barrel over Singapore quotes, their highest in more than two weeks. The gasoil cash
differentials were at a premium of 77 cents a barrel on Friday.
    The January/February time spread for 10 ppm gasoil widened its backwardated
structure by 4 cents to trade at a premium of 42 cents a barrel on Monday.
    In backwardation, the front-month contract is more expensive than subsequent months, making
it uneconomical to store the product, leading to a drawdown in inventories. It is usually seen
as an indication that prices are likely to head higher in future months.
    Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content
slipped 23 cents to $15.45 per barrel over Dubai crude during Asian trading hours on Friday.
    Meanwhile, jet fuel cracks eased to $14.85 per barrel over Dubai crude on
Monday, down from $15.13 per barrel in the previous session on Friday.
    Cash differentials for jet fuel JET-SIN-DIF narrowed their discounts to 2 cents per barrel
to Singapore quotes, backed by a couple of firmer deals in the physical trading window in
Singapore. They were at a discount of 11 cents a barrel on Friday.
    
    CHINA NOVEMBER PRODUCT EXPORTS
    - China's diesel exports climbed to 2.21 million tonnes in November, up from 1.19 million
tonnes in October and nearly 80% higher than a year earlier, data from the General
Administration of Customs showed on Monday.
    - Gasoline shipments were 1.84 million tonnes last month. That compares to the previous
record at 1.73 million tonnes in October and 630,000 tonnes in November 2018.
    - Jet kerosene exports rose to 1.62 million tonnes in November from 1.58 million tonnes the
previous month and 1.54 million tonnes in the same month last year.
    
    U.S.-EUROPE OIL FREIGHT RATES HIT RECORD
    - Rates for Aframax-class crude oil tankers leaving the U.S. Gulf Coast hit a record this
week, according to three shipbrokers, reflecting strong demand in Europe and the Mediterranean
for low-sulphur crude.
    - Equinor ASA and Unipec, the trading arm of China's top refiner Sinopec,
provisionally chartered Aframax tankers Everest Spirit and Nordorchid, respectively, this week
at rates of 245 worldscale points, according to one broker and Refinitiv Eikon data. Both
vessels are headed to Europe.
    - The worldscale rate translates to about $60,700-per-day, well above the $46,800-per-day
rate a week ago for Aframax vessels, according to calculations by shipbroker and consultants
Poten & Partners. 

    SINGAPORE CASH DEALS
    - No gasoil trades, two jet fuel deals.
    - Singapore trader Hin Leong bought 100,000 barrels of jet fuel from Shell for Jan. 7-11
loading at a premium of 10 cents a barrel to Singapore quotes.
    - Hin Leong bought another 100,000 barrels of jet fuel from Shell for Jan. 14-18 loading at
a premium of 10 cents a barrel to Singapore quotes.
    - For more information, please click
    
    OTHER NEWS
    - Oil prices slipped on Monday, but held near recent three-month highs amid optimism that
the United States and China are close to signing a trade deal, with President Donald Trump
saying an agreement would be signed "very shortly".
    - U.S. energy firms added the most oil rigs last week since February 2018 - primarily in the
Permian shale - even though producers have been reducing spending on new drilling for much of
this year. Companies added 18 oil rigs in the week to Dec. 20, bringing the total count to 685,
the most since early November, energy services firm Baker Hughes Co said in its closely
followed report on Friday. 

    
    ASSESSMENTS
 MID-DISTILLATES                                                                       
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               77.63    -0.99      -1.26       78.62  GO-SIN
 GO 0.5 Diff                     -2.27     0.01      -0.44       -2.28  GO-SIN-DIF
 Spot Gas Oil 0.25%              78.23    -0.99      -1.25       79.22  GO25-SIN
 GO 0.25 Diff                    -1.67     0.01      -0.60       -1.68  GO25-SIN-DIF
 Spot Gas Oil 0.05%              79.45    -0.99      -1.23       80.44  GO005-SIN
 GO 0.05 Diff                    -0.45     0.01      -2.17       -0.46  GO005-SIN-DIF
 Spot Gas Oil 0.001%             80.68    -0.99      -1.21       81.67  GO10-SIN
 GO 0.001 Diff                    0.78     0.01       1.30        0.77  GO10-SIN-DIF
 Spot Jet/Kero                   79.28    -0.91      -1.13       80.19  JET-SIN
 Jet/Kero Diff                   -0.02     0.09     -81.82       -0.11  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 Rashmi Aich)
  
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