November 14, 2019 / 11:07 AM / a month ago

Asia Distillates-Gasoil cracks rise, but supplies still aplenty

    SINGAPORE, Nov 14 (Reuters) - Asian refining margins for 10 ppm gasoil rose on Thursday
but still hovered near their five-month lows touched in the previous session as the region
wrestled with abundant supplies.
    Refining margins or cracks for 10 ppm gasoil rose to $14.95 per barrel over
Dubai crude during Asian trade on Thursday. The cracks had fallen to $14.27 per barrel on
Wednesday, their lowest since June 11.
    The gasoil cracks have declined in recent weeks as some regional refineries return to
production after maintenance, while export volumes from state refiners in India have surged on
the back of weaker demand in its domestic market.
    Market participants had widely anticipated a boost in gasoil margins in late 2019 as
ship-owners switch out bunker oil for cleaner fuels such as marine gasoil (MGO) to comply with
new sulphur emissions rules set by the International Maritime Organization for 2020. 
    But the expected jump in demand has not yet materialized as buyers have delayed purchases
until absolutely necessary.
    Gasoil demand related to IMO 2020, however, should become more apparent in the coming
weeks, according to traders and industry analysts.
    Cash premiums for gasoil with 10 ppm sulphur content GO10-SIN-DIF, which have dropped
about 67% over the last two weeks, were at 32 cents per barrel to Singapore quotes on
Thursday. They were at a premium of 30 cents per barrel a day earlier. 
    Meanwhile, cash differentials for jet fuel JET-SIN-DIF widened their discounts by 3
cents to 62 cents per barrel to Singapore quotes on Thursday, hurt by persistently muted
demand for physical cargoes. 
    Jet fuel cracks rose to $14.94 per barrel over Dubai crude on Thursday,
compared with $14.61 per barrel on Wednesday.
    
    CHINA REFINERY OUTPUT RISES IN OCT
    -  China's crude oil throughput in October rose 9.2% from a year earlier to the
second-highest on record, as refineries in the world's second-biggest oil consumer and top
importer ramped up output after returning from plant maintenance.
    - Last month, crude processing volumes were 57.84 million tonnes, or about 13.62 million
barrels per day (bpd), below the record of 13.75 million bpd reached in September, data from
the National Bureau of Statistics showed on Thursday.
    - The launch of two large-scale refineries by privately owned Hengli Petrochemical
 and Zhejiang Petrochemical along with the start of an expansion at a PetroChina
 refinery also pushed crude runs higher last month.
    - Faced with a slowing economy and tepid demand for refined oil products, however, the
hefty crude throughput may increase a fuel surplus in China and encourage refiners to boost
product exports in coming months.
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks drew 8.5% to 10.2 million barrels in the week
ended Nov. 13, Enterprise Singapore data showed.
    - Weekly middle distillate inventories have averaged 11.1 million barrels so far this
year, having averaged 9.6 million barrels a week in 2018, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 3.6% higher year-on-year.
    - Light distillate stocks dropped 1.1 million barrels to a five-week low of 10.67 million
barrels in the week ended Wednesday, while fuel oil stocks fell 544,000 barrels to a six-week
low of 20.4 million barrels, Enterprise Singapore data showed.
    
    API INVENTORY DATA
    - U.S. crude stocks fell last week, while gasoline and distillate inventories increased,
data from industry group the American Petroleum Institute showed on Wednesday.
    - Crude inventories fell by 541,000 barrels in the week to Nov. 8 to 440 million, compared
with analysts' expectations for an increase of 1.6 million barrels.
    - Distillate fuels stockpiles, which include diesel and heating oil, rose by 887,000
barrels, compared with expectations for a 950,000-barrel drop, the API data showed.
    
    SINGAPORE CASH DEALS
    - One gasoil trade, no jet fuel deals.
    - Singapore trader Hin Leong sold 165,000 barrels of 10ppm gasoil to BP for Dec. 3-7
loading at a premium of 20 cents a barrel to Singapore quotes.
    - For more information, please click
    
    OTHER NEWS
    - U.S. shale oil supply growth could slow down next year, OPEC's secretary general said on
Wednesday in his latest indication that the oil market in 2020 could surprise to the upside.
    Mohammad Barkindo said there would likely be downward revisions of supply going into 2020
especially from United States shale, adding that some U.S. shale oil firms see output growing
by only around 300,000-400,000 barrels per day.
    - Oil rose on Thursday after industry data showed a surprise drop in U.S. crude
inventories, while comments from an OPEC official about lower-than-expected U.S. shale
production growth in 2020 also provided some support.
    
    ASSESSMENTS
 MID-DISTILLATES                                                         
 CASH ($/T)            ASIA CLOSE       Change   % Change    Prev Close  RIC
 Spot Gas Oil 0.5%               72.15     1.65        2.34       70.50  GO-SIN
 GO 0.5 Diff                     -3.55     0.05       -1.39       -3.60  GO-SIN-DIF
 Spot Gas Oil 0.25%              72.31     1.67        2.36       70.64  GO25-SIN
 GO 0.25 Diff                    -3.39     0.07       -2.02       -3.46  GO25-SIN-DIF
 Spot Gas Oil 0.05%              75.24     1.66        2.26       73.58  GO005-SIN
 GO 0.05 Diff                    -0.46     0.06      -11.54       -0.52  GO005-SIN-DIF
 Spot Gas Oil 0.001%             76.02     1.61        2.16       74.41  GO10-SIN
 GO 0.001 Diff                    0.32     0.02        6.67        0.30  GO10-SIN-DIF
 Spot Jet/Kero                   74.78     1.17        1.59       73.61  JET-SIN
 Jet/Kero Diff                   -0.62    -0.03        5.08       -0.59  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 Anil D'Silva)
  
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