March 18, 2020 / 11:20 AM / 17 days ago

Asia Distillates-Jet fuel cash discounts widen, cracks hit fresh low

    SINGAPORE, March 18 (Reuters) - Asia's cash discounts for jet fuel widened on
Wednesday, hurt by muted buying interest for physical cargoes, while refining margins
for the aviation fuel stooped further to hit a fresh low in over a decade as airlines
continued to suspend routes due to the coronavirus.
    Refining margins for jet fuel dropped for a third consecutive session
at $2.12 per barrel over Dubai crude during Asian trading hours, the lowest on record as
per Refinitiv Eikon data that goes back as far as March 2009. They were at $3.82 a
barrel on Tuesday.
    Cash discounts for jet fuel JET-SIN-DIF were at 38 cents per barrel to Singapore
quotes on Wednesday, compared with a discount of 28 cents per barrel on Tuesday.
    The front-month time spread for the aviation fuel in Singapore widened
its contango to trade at a discount of $1.28 a barrel, a level not seen since August
2015. The spread was at minus 84 cents on Tuesday.
    Contango market structure, where prompt prices are lower than those for future
delivery, tends to encourage holders of physical barrels to store the product and sell
it later to secure higher prices. 
    The physical jet fuel market in the Singapore trading window remained muted with no
bids or deals on Wednesday.
    Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a narrow
discount of 1 cent per barrel to Singapore quotes on Wednesday, as against a 2-cent
premium in the previous session.
    Refining margins for gasoil with 10 ppm sulphur content slipped to
$8.23 per barrel over Dubai crude on Wednesday, compared with $8.78 per barrel on
Tuesday.
    
    CORONAVIRUS EMPTIES AIRLINES' CASH DRAWERS
    - Global airlines are fast running out of cash after cutting capacity by 90% or even
grounding entire fleets due to the broad travel restrictions to contain the spread of
the coronavirus, calling into question the survival of several firms.
    - The outbreak of the flu-like virus has wiped 41%, or $157 billion, off the share
value of the world's 116 listed airlines, with many using up their cash so fast they can
now cover less than two months of expenses, a Reuters analysis showed.
    - The industry's main global body, the International Air Transport Association
(IATA), estimates the sector needs up to $200 billion in government support to help
airlines survive. 
    
    GLOBAL REFINERS PREPARE RUN CUTS
    - Falling prices for crude oil are usually a good thing for global refiners - except
when nobody is driving. Worldwide, refineries are slowing output and contemplating
extensive maintenance due to travel restrictions put in place in response to the
coronavirus pandemic.
    - Gasoline demand in the United States, the world's largest oil consumer, is
plunging. International flights are being grounded worldwide, slamming jet fuel demand. 

    FUJAIRAH STOCKS
    - Middle-distillate inventories in the Fujairah Oil Industry Zone rose 22.4% to 3.1
million barrels in the week to March 16, data via S&P Global Platts showed.
    - Stocks of middle distillates in the Fujairah oil hub have averaged 3.2 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 36% higher than a year
earlier.
    
    API INVENTORY DATA
    - U.S. crude oil inventories edged lower in the most recent week, while gasoline and
distillate stocks fell, data from industry group the American Petroleum Institute showed
on Tuesday.
    - Crude inventories dipped by 421,000 barrels in the week to March 13 to 452.6
million barrels, compared with analysts' expectations for a build of 3.3 million
barrels.
    - Distillate fuel inventories, which include diesel and heating oil, fell by 3.6
million barrels, compared with expectations for a 1.9 million-barrel draw, the data
showed.
    
    SINGAPORE CASH DEALS
    - No gasoil trades, no jet fuel deals
    - For more information, click
    
    OTHER NEWS
    - Goldman Sachs slashed its price forecast for second-quarter Brent crude oil by a
third to $20 a barrel, predicting global demand would drop a record of 1.1 million
barrels per day (bpd) this year as the coronavirus epidemic slams economic growth.

    - Oil prices fell for a third session on Wednesday to be down about 17% so far this
week as the outlook for fuel demand darkened amid travel and social lockdowns triggered
by the coronavirus epidemic.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                        
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                36.63    -2.51      -6.41       39.14  GO-SIN
 GO 0.5 Diff                      -1.95     0.00       0.00       -1.95  GO-SIN-DIF
 Spot Gas Oil 0.25%               36.87    -2.51      -6.37       39.38  GO25-SIN
 GO 0.25 Diff                     -1.71     0.00       0.00       -1.71  GO25-SIN-DIF
 Spot Gas Oil 0.05%               37.56    -2.51      -6.26       40.07  GO005-SIN
 GO 0.05 Diff                     -1.02     0.00       0.00       -1.02  GO005-SIN-DIF
 Spot Gas Oil 0.001%              38.57    -2.55      -6.20       41.12  GO10-SIN
 GO 0.001 Diff                    -0.01    -0.03    -150.00        0.02  GO10-SIN-DIF
 Spot Jet/Kero                    31.94    -3.81     -10.66       35.75  JET-SIN
 Jet/Kero Diff                    -0.38    -0.10      35.71       -0.28  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;)
  
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