May 4, 2020 / 10:46 AM / a month ago

Asia Distillates-Gasoil cracks plunge as region stays awash with supplies

    SINGAPORE, May 4 (Reuters) - Asian refining margins for 10
ppm gasoil plunged on Monday, weighed down by lacklustre demand
amid ongoing coronavirus-led restrictions, while higher supplies
from India are worsening the existing glut in the region.
    Refining margins, also known as cracks, for gasoil with 10
ppm sulphur content dropped to $4.56 a barrel over
Dubai crude during Asian trading hours on Monday, down from
$6.11 a barrel in the last trading session on Thursday.
    India, which has now extended its nationwide lockdown for
another two weeks after May 4, is pushing more barrels into the
wider Asian market which is already grappling with supplies,
despite refinery run cuts in the region.
    Indian state retailers' gasoil sales in April dropped by 57%
from a year earlier. A weak domestic consumption pattern
typically leads to increased import volumes from the country.

    India's April gasoil exports closed at a four-month high of
2.73 million mt, compared to 2.53 million mt in March, according
to Refinitiv oil research assessments.
    The strong EFS (Exchange of Futures for Swaps) spread and
intense competition from Middle Eastern refiners has led Indian
cargoes to swing East, with 1.12 million mt, the highest
proportion since May 2018, the assessments showed.
    The EFS, which determines the Asian gasoil price spread
between east and west,   traded at minus $1.57 a
tonne on Monday, Refinitiv data showed, and traders said it was
not profitable to ship cargoes from east to west.
    "With little incentive to ship diesel, the oversupply in the
region will certainly be exacerbated as refinery run cuts have
been lagging behind demand losses," consultancy Energy Aspects
said in its April note.
    "Recovery in end-user demand is likely to be slow through
May as outside of China large swathes of Asia remain under
strict lockdown... As diesel molecules remain trapped in the
region, all signs point to a deepening contango and more
aggressive supply cuts." 
    Cash discounts for 10 ppm gasoil GO10-SIN-DIF were at
$1.58 per barrel to Singapore quotes on Monday, compared with a
discount of $1.85 per barrel on Thursday.
    Meanwhile, cash discounts for jet fuel JET-SIN-DIF widened
to $4.65 a barrel to Singapore quotes on Monday, compared with
$4.57 per barrel on Thursday.
    Refining margins for jet fuel were at $3.16 a
barrel below Dubai crude on Monday, compared with minus $3.19 on
    - No jet fuel trades, no gasoil deals
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    - Oil prices fell on Monday on worries that a global oil
glut may persist even as coronavirus pandemic lockdowns start to
ease, amid a fresh spat between the United States and China over
the origin of the virus.
    - Lower crude production due to reduced activity and OPEC+
cuts, coupled with a partial recovery in oil demand, should
drive prices higher next year, Goldman Sachs Equity Research
said in a note.
 CASH ($/T)                ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                   26.11    -0.93      -3.44       27.04  GO-SIN
 GO 0.5 Diff                         -4.66     0.30      -6.05       -4.96  GO-SIN-DIF
 Spot Gas Oil 0.25%                  26.60    -0.86      -3.13       27.46  GO25-SIN
 GO 0.25 Diff                        -4.17     0.37      -8.15       -4.54  GO25-SIN-DIF
 Spot Gas Oil 0.05%                  26.70    -1.14      -4.09       27.84  GO005-SIN
 GO 0.05 Diff                        -4.07     0.09      -2.16       -4.16  GO005-SIN-DIF
 Spot Gas Oil 0.001%                 29.19    -0.96      -3.18       30.15  GO10-SIN
 GO 0.001 Diff                       -1.58     0.27     -14.59       -1.85  GO10-SIN-DIF
 Spot Jet/Kero                       16.58    -2.13     -11.38       18.71  JET-SIN
 Jet/Kero Diff                       -4.65    -0.08       1.75       -4.57  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 Emelia
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