May 13, 2020 / 11:13 AM / 14 days ago

Asia Distillates-Gasoil refining margins drop despite weaker crude prices

    SINGAPORE, May 13 (Reuters) - Asian refining margins for 10 ppm gasoil fell on Wednesday
even as prices of raw material crude weakened, while cash discounts for the industrial fuel were
unchanged amid sluggish buying interest for physical cargoes.
    Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content
dropped 63 cents to $3.50 a barrel over Dubai crude during Asian trading hours on Wednesday.
    Crude oil prices fell on Wednesday as potential OPEC+ plans to deepen supply cuts were
overshadowed by demand concerns exacerbated by a possible second wave of coronavirus infections
as countries ease lockdowns.
    Cracks for the benchmark gasoil grade in Singapore have slumped 70% since March-end as
coronavirus-led travel restrictions rattled transportation demand, while traders said the
regional market remains awash with supplies with lack of arbitrage opportunities.
    "Globally, diesel cracks are now approaching their weakest points since at least the summer
of 2016, if not 2009, and are now beginning to give a clear signal that refinery utilisation
needs to be kept in check, despite some optimism growing over improving end-user demand going
forward," JBC Energy said on Wednesday.
    "With jet/kero anyway in the doldrums and only a mild uptick in demand fortunes expected
here in the short-term, middle distillates appear to be taking on the role of refinery
utilisation restraint even as gasoline cracks begin to improve," the Vienna-based consultancy
said in a note.
    Cash discounts for 10 ppm gasoil GO10-SIN-DIF were unchanged at $1.35 per barrel to
Singapore quotes on Wednesday.
    Meanwhile, cash discounts for jet fuel JET-SIN-DIF narrowed to $2.06 a barrel to Singapore
quotes on Wednesday, compared with a discount of $2.12 a barrel on Tuesday.
    Jet fuel cracks in Singapore were at a discount of $3 a barrel to Dubai crude
on Wednesday, compared with Tuesday's minus $2.26 per barrel.
    
    INDONESIA BIODIESEL PROGRAMME
    - The Indonesian government is considering alternate plans to increase subsidies for the
country's ambitious biodiesel programme after crude oil prices tumbled, a finance ministry
official said on Wednesday.
    - A historic crash in oil prices this year has widened the cost difference between standard
diesel fuel and the fatty acid methyl ester (FAME), making biodiesel more expensive to be
subsidised.
    
    FUJAIRAH STOCKS
    - Middle-distillate inventories in the Fujairah Oil Industry Zone rose 12.6% to 5.5 million
barrels in the week to May 11, data via S&P Global Platts showed.
    - Stocks of middle distillates in the Fujairah oil hub have averaged 3.3 million barrels so
far in 2020, compared with a weekly average of 2.4 million barrels in 2019, Reuters calculations
showed.
    - The weekly Fujairah middle distillate stocks were about 140% higher as compared with a
year earlier.
    
    API INVENTORY DATA
    - U.S. crude oil and distillate stocks rose while gasoline stocks fell, data from industry
group the American Petroleum Institute showed on Tuesday.
    - Distillate fuel inventories, which include diesel and heating oil, rose by 4.7 million
barrels, compared with expectations for an increase of 2.9 million barrels.
    
    SINGAPORE CASH DEALS
    - One jet fuel trade, no gasoil deals
    - For more information, click
    
    OTHER NEWS
    - OPEC and its allies want to maintain existing oil cuts beyond June when the OPEC+ group is
next due to meet to shore up prices and demand, which has been hit by the coronavirus pandemic,
four OPEC+ sources said on Tuesday.
    - U.S. oil demand is set to crash by 2.2 million barrels per day (bpd) in 2020 to 18.3
million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, as the
coronavirus pandemic restricts movement across the world and erodes fuel demand.
    
    ASSESSMENTS    
 MID-DISTILLATES                                                                          
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                28.36    -1.31      -4.42       29.67  GO-SIN
 GO 0.5 Diff                      -4.53    -0.02       0.44       -4.51  GO-SIN-DIF
 Spot Gas Oil 0.25%               28.90    -1.26      -4.18       30.16  GO25-SIN
 GO 0.25 Diff                     -3.99     0.03      -0.75       -4.02  GO25-SIN-DIF
 Spot Gas Oil 0.05%               29.06    -1.31      -4.31       30.37  GO005-SIN
 GO 0.05 Diff                     -3.83    -0.02       0.52       -3.81  GO005-SIN-DIF
 Spot Gas Oil 0.001%              31.54    -1.29      -3.93       32.83  GO10-SIN
 GO 0.001 Diff                    -1.35     0.00       0.00       -1.35  GO10-SIN-DIF
 Spot Jet/Kero                    23.82    -1.30      -5.18       25.12  JET-SIN
 Jet/Kero Diff                    -2.06     0.06      -2.83       -2.12  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 Aditya Soni)
  
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