December 18, 2019 / 10:37 AM / a month ago

Asia Distillates-Jet fuel cash differentials flip to discount

    SINGAPORE, Dec 18 (Reuters) - Asia's cash differentials for jet fuel flipped to a discount
on Wednesday, hurt by weaker buying interest for physical cargoes as the market continued to
grapple with ample supplies.
    Cash differentials for jet fuel JET-SIN-DIF were at a discount of 8 cents per barrel to
Singapore quotes, compared with a premium of 5 cents a barrel on Tuesday.
    The front-month time-spread for the aviation fuel in Singapore widened by 2
cents to trade at a premium of 31 cents a barrel on Wednesday, indicating the market would
likely firm up in the coming weeks.
    Refining profit margins, or cracks, for jet fuel rose to $15.49 per barrel over
Dubai crude during Asian trade on Wednesday, up from $14.95 per barrel a day earlier.
    Meanwhile, cracks for gasoil with 10 ppm sulphur content rose to $15.99 per
barrel over Dubai crude on Wednesday, their strongest in nearly six weeks. The gasoil refining
margins were at $15.60 per barrel on Tuesday. 
    "Ship-owners will increasingly shift to marine gasoil in H1 2020 amid the shortage of 0.5%
sulphur fuel oil supply. This will provide a boost to middle distillate cracks," said Rui Hou, a
refining consultant at Wood Mackenzie.
    The new International Maritime Organization (IMO) rules prohibit ships from using fuels
containing more than 0.5% sulphur, compared with 3.5% through the end of December, and one way
to do so is to switch to marine gasoil.
    Gasoil demand in 2020 is expected to rise by 1 million barrels per day, which includes 
international and domestic bunker demand, according to WoodMac.
    Cash premiums for 10ppm gasoil GO10-SIN-DIF climbed for a fourth consecutive session to 70
cents per barrel over Singapore quotes on Wednesday, 5 cents higher compared with Tuesday.

    FUJAIRAH STOCKS
    - Middle-distillate inventories in the Fujairah Oil Industry Zone rose 9% from a week
earlier to 4.03 million barrels in the week to Dec. 16, data via S&P Global Platts showed.

    - Stocks of middle distillates in the Fujairah oil hub have averaged 2.3 million barrels so
far in 2019, Reuters calculations showed. This compares with a weekly average of 2.8 million
barrels in 2018.
    - Weekly Fujairah middle distillate stocks have more than doubled, when compared with
year-ago levels.
    
    API INVENTORY DATA
    - U.S. crude stocks rose unexpectedly in the most recent week while gasoline and distillate
inventories rose, data from industry group the American Petroleum Institute showed on Tuesday.

    - Crude inventories rose by 4.7 million barrels in the week to Dec. 13 to 452 million,
compared with analysts' expectations for a draw of 1.3 million barrels.
    - Distillate fuels stockpiles, which include diesel and heating oil, rose by 3.7 million
barrels, compared with expectations for a 312,000-barrel gain, the data showed.
    
    SINGAPORE CASH DEALS
    - One gasoil trade, one jet fuel deal.
    - BP sold 150,000 barrels of 10 ppm gasoil to Unipec for Jan. 9-13 loading at a premium of
80 cents barrel to Singapore quotes.
    - Singapore trader Hin Leong bought 100,000 barrels of jet fuel from Shell for Jan. 8-12
loading at parity to January Singapore quotes.
    - For more information, please click
    
    OTHER NEWS
    - Saudi Arabia turned to its Gulf ally the United Arab Emirates when it needed help
convincing Russia to sign on to deeper oil supply cuts at this month's OPEC meeting.
    The UAE's de-facto ruler, Sheikh Mohammed bin Zayed, hosted key talks between Saudi Arabia
and Russia in Abu Dhabi, where the three nations ironed out what would become one of the deepest
supply cuts in a decade, four sources familiar with the negotiations told Reuters.
    - Oil prices were lower after U.S. industry data showed a surprise build in crude
inventories, but expectations for firmer demand next year kept losses in check.
    - India aims to invest in producing oil and gas fields abroad to compensate for falling
domestic output and to help reduce the impact of oil price volatility, the oil minister said on
Tuesday. India, the world's third biggest oil consumer, imports about 80% of its oil needs,
making it highly susceptible to crude price swings.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                       
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               78.00     0.39       0.50       77.61  GO-SIN
 GO 0.5 Diff                     -2.27    -0.11       5.09       -2.16  GO-SIN-DIF
 Spot Gas Oil 0.25%              78.60     0.39       0.50       78.21  GO25-SIN
 GO 0.25 Diff                    -1.67    -0.11       7.05       -1.56  GO25-SIN-DIF
 Spot Gas Oil 0.05%              79.83     0.40       0.50       79.43  GO005-SIN
 GO 0.05 Diff                    -0.44    -0.10      29.41       -0.34  GO005-SIN-DIF
 Spot Gas Oil 0.001%             80.97     0.54       0.67       80.43  GO10-SIN
 GO 0.001 Diff                    0.70     0.05       7.69        0.65  GO10-SIN-DIF
 Spot Jet/Kero                   79.67     0.52       0.66       79.15  JET-SIN
 Jet/Kero Diff                   -0.08    -0.13    -260.00        0.05  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 David Evans)
  
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