January 16, 2020 / 11:14 AM / 12 days ago

Asia Distillates-Gasoil cash premiums slip amid weaker trades

    SINGAPORE, Jan 16 (Reuters) - Asia's cash premiums for 10 ppm gasoil fell to their lowest in
1-1/2 months on Thursday, hurt by a couple of weaker deals in the physical market.
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF dipped 2 cents to 27 cents per barrel over
Singapore quotes on Thursday, their lowest since Dec. 2.
    The gasoil market awaits higher demand over the next couple of months, as a section of
ship-owners are expected to switch to marine gasoil (MGO) to comply with new regulations on
cleaner marine fuels.
    The International Maritime Organization (IMO) has banned ships from using fuels with sulphur
content of more than 0.5%, effective Jan. 1. 
    Ship operators have shown strong preference for very low sulphur fuel oil (VLSFO), but
gasoil traders said they were expecting MGO demand to pick up by the end of this month or early
next month.
    The front-month time spread for 10 ppm gasoil traded at a premium of 19 cents
a barrel on Thursday, Refinitiv data showed. The backwardation in the market indicates prices
would likely strengthen in coming months.
    Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content
dropped to $12.27 per barrel over Dubai crude during Asian trade on Thursday, a level not seen
since April-end last year.
    Meanwhile, refining margins for jet fuel were at $11.64 per barrel over Dubai
crude, down from $12.17 per barrel on Wednesday. 
    The jet fuel cracks have plunged to their weakest levels in more than eight months, weighed
down by weak aviation demand and a drop in the use of heating oil due to a warm winter in
Northeast Asia.
    Cash premiums for the aviation fuel JET-SIN-DIF edged higher to 13 cents a barrel over
Singapore quotes, compared with a premium of 11 cents on Wednesday.
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks rose 4.9% to a two-week high of 10.1 million
barrels in the week to Jan. 15, Enterprise Singapore data showed.
    - Weekly middle distillate inventories averaged 11.1 million barrels in 2019, having
averaged 9.6 million barrels a week in 2018, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 19.8% lower year on year.
    - Light distillate stocks rose 1.07 million barrels to a near nine-month high of 13.1
million barrels in the week to Wednesday, while fuel oil stocks rose 831,000 barrels to a more
than six-month high of 22.7 million barrels, Enterprise Singapore data showed.
    
    EIA INVENTORIES
    -  U.S. crude stocks fell in the latest week while gasoline and distillate inventories rose,
the Energy Information Administration said on Wednesday.
    - Crude inventories fell by 2.5 million barrels in the last week to 428.5
million barrels, much more sharply than the 474,000-barrel drop analysts had expected in a
Reuters poll. 
    - Distillate stockpiles, which include diesel and heating oil, rose by 8.2
million barrels in the week to 147.2 million barrels, versus expectations for a 1.2
million-barrel rise, the EIA data showed.
    
    TENDERS
    - India's Mangalore Refinery and Petrochemicals Ltd (MRPL) was offering 40,000 tonnes of jet
fuel for loading over Feb. 13-15 from the port of New Mangalore.
    - The tender closes on Jan. 21 and will remain valid until Jan. 22.
    - For more such information, please click
    
    SINGAPORE CASH DEALS
    - Eight gasoil trades, no jet fuel deals.
    - For more information, click
    
    OTHER NEWS
    - U.S. oil and gas exports should jump over the next two years, if China fulfils its pledges
to increase energy purchases under the trade deal between the world's two largest economies
signed on Wednesday, executives and traders said.
    - Oil prices rose on Thursday after the signing of an initial Sino-U.S. trade deal that sets
the stage for a surge in Chinese purchases of American energy products, while U.S. crude
inventories fell more than expected.

    
    ASSESSMENTS    
 MID-DISTILLATES                                                                         
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                73.35    -0.64      -0.86       73.99  GO-SIN
 GO 0.5 Diff                      -2.13    -0.07       3.40       -2.06  GO-SIN-DIF
 Spot Gas Oil 0.25%               74.06    -0.64      -0.86       74.70  GO25-SIN
 GO 0.25 Diff                     -1.42    -0.07       5.19       -1.35  GO25-SIN-DIF
 Spot Gas Oil 0.05%               75.20    -0.64      -0.84       75.84  GO005-SIN
 GO 0.05 Diff                     -0.28    -0.07      33.33       -0.21  GO005-SIN-DIF
 Spot Gas Oil 0.001%              75.76    -0.58      -0.76       76.34  GO10-SIN
 GO 0.001 Diff                     0.27    -0.02      -6.90        0.29  GO10-SIN-DIF
 Spot Jet/Kero                    74.97    -0.59      -0.78       75.56  JET-SIN
 Jet/Kero Diff                     0.13     0.02      18.18        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 Vinay Dwivedi)
  
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