April 30, 2020 / 10:45 AM / a month ago

Asia Distillates-Gasoil cracks gain; market expects near-term weakness to persist

    SINGAPORE, April 30 (Reuters) - Asian refining margins for 10 ppm gasoil climbed on
Thursday, but the market for the industrial and transportation fuel is expected to remain under
pressure in the near term even as some economies gradually pick up after the spread of the
coronavirus is curbed in those regions.
    Refining profit margins, or cracks, for gasoil with 10 ppm sulphur content
rose to $6.11 a barrel over Dubai crude during Asian trading hours on Thursday, up from $4.55 a
barrel on Wednesday.
    Cracks for the benchmark gasoil grade in Singapore, which hit a record low of $2.83 per
barrel earlier this week, have slumped over 52% in the last month, Refinitiv data showed.
    Sluggish industrial activity and travel restrictions due to extended lockdowns, alongside
disruptions to global supply chains, could cut gasoil demand by more than 4 million barrels per
day in the second quarter from the same period in 2019, industry analysts said.
    But gasoil still yields positive margins in the refining complex, unlike the other middle
distillate, jet fuel.
    An ongoing shift in refinery yields away from the beleaguered products such as jet fuel and
gasoline partially offsets the reduction in gasoil output from ongoing refinery run cuts,
analysts said.
    Cash discounts for 10 ppm gasoil GO10-SIN-DIF were at $1.85 per barrel to Singapore quotes
on Thursday, compared with a discount of $1.91 per barrel a day earlier.
    Meanwhile, cash discounts for jet fuel JET-SIN-DIF widened to $4.57 a barrel to Singapore
quotes on Thursday, compared with $4.47 per barrel a day earlier.
    Jet fuel cracks were at $3.19 a barrel below Dubai crude on Thursday, compared
with minus $4.07 on Wednesday.
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks rose 3% to 14.9 million barrels in the week
ended April 29, Enterprise Singapore data showed.
    - Weekly middle distillate inventories have averaged at 12 million barrels so far in 2020,
compared with 11.1 million barrels in 2019, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 38.4% higher year-on-year.
    
    SINOPEC'S FUEL SALES REBOUND
    - China Petroleum & Chemical Corp (Sinopec) said on Thursday its daily sales of refined oil
products have resumed to more than 90% of levels seen before the coronavirus outbreak.

    - Diesel sales matched levels from a year ago, while sales of gasoline and petrochemical
products have rebounded to 90% and 86%, respectively, of their year-ago levels. 
    
    MARCH AIR PASSENGER DATA - IATA
    - Global air passenger traffic for March showed that demand slumped 52.9% from a year
earlier, the International Air Transport Association (IATA) said on Wednesday.
    - March passenger traffic for Asia-Pacific airlines dropped 65.5% compared to the year-ago
period, more than double the 30.7% decline in February, according to IATA data.
    - "March was a disastrous month for aviation. Airlines progressively felt the growing impact
of the COVID-19 related border closings and restrictions on mobility, including in domestic
markets," IATA Chief Executive Alexandre de Juniac said.
    "Worse, we know that the situation deteriorated even more in April and most signs point to a
slow recovery." 
    - Among regional markets, China's domestic passenger demand was down 65.5% in March
year-on-year, while airlines in Japan posted a decline of 55.8% in domestic traffic.
    
    EIA INVENTORIES
    - U.S. crude oil stockpiles rose less than expected last week while gasoline inventories
dropped for the first time in five weeks, the Energy Information Administration said on
Wednesday, as the sharp decline in fuel demand due to the coronavirus pandemic is ebbing.

    - Distillate stockpiles, which include diesel and heating oil, rose 5.1 million
barrels, more than the 3.6 million-barrel rise forecast, EIA data showed.
    
    TENDERS
    - India's Mangalore Refinery and Petrochemicals Ltd (MRPL) has offered 65,000 tonnes of high
speed diesel (HSD) -- gasoil with 10 ppm sulphur content -- for May 26-28 loading from the port
of New Mangalore.
    - The tender closes on May 5 and has a same-day validity.
    
    SINGAPORE CASH DEALS
    - No jet fuel trades, no gasoil deals
    - For more information, click
    
    OTHER NEWS
    - Economic lockdowns brought on by the coronavirus pandemic look set to cut global energy
demand and carbon dioxide emissions by record amounts, the International Energy Agency (IEA)
said on Thursday.
    - Oil prices jumped on Thursday, buoyed by signs that the U.S. crude glut is not growing as
quickly as expected and that fuel demand battered by COVID-19 restrictions is starting to pick
up.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                         
 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                 27.04     3.70      15.85       23.34  GO-SIN
 GO 0.5 Diff                       -4.96    -0.01       0.20       -4.95  GO-SIN-DIF
 Spot Gas Oil 0.25%                27.46     3.86      16.36       23.60  GO25-SIN
 GO 0.25 Diff                      -4.54     0.15      -3.20       -4.69  GO25-SIN-DIF
 Spot Gas Oil 0.05%                27.84     3.70      15.33       24.14  GO005-SIN
 GO 0.05 Diff                      -4.16    -0.01       0.24       -4.15  GO005-SIN-DIF
 Spot Gas Oil 0.001%               30.15     3.77      14.29       26.38  GO10-SIN
 GO 0.001 Diff                     -1.85     0.06      -3.14       -1.91  GO10-SIN-DIF
 Spot Jet/Kero                     18.71     3.07      19.63       15.64  JET-SIN
 Jet/Kero Diff                     -4.57    -0.10       2.24       -4.47  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 Devika Syamnath)
  
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