June 24, 2020 / 11:07 AM / 13 days ago

Asia Distillates-Jet fuel refining profit drops on sluggish demand

    SINGAPORE, June 24 (Reuters) - Asian refining profit margins for jet fuel slipped on
Wednesday, despite weaker crude prices as a majority of international flights remain grounded
due to the coronavirus-led restrictions and as China deals with a renewed outbreak in its
capital city.
    Refining margins, also known as cracks, for jet fuel were at $2.09 a barrel
over Dubai crude during Asian trade on Wednesday, 44 cents lower from the previous session.
    Despite countries easing coronavirus-related restrictions in recent weeks, the aviation
sector is expected to remain under pressure for long as passengers continue to shy away from
non-essential travel to avoid quarantine requirements, trade sources said.
    "Jet fuel's arguably been hit harder by the COVID-19 pandemic than diesel, as even as
lockdowns gradually lift in some countries, the same cannot be said for travel bans in place,"
said Peter Lee, senior oil & gas analyst at Fitch Solutions.
    "In fact, for the countries that are beginning to ease COVID-19 measures – such as Singapore
for instance – gradual resumption of travels look set to only apply to essential, official
business travels and even these would be stringently vetted," Lee added.
    Cash discounts for jet fuel JET-SIN-DIF were at 79 cents a barrel to Singapore quotes on
Wednesday, compared with a discount of 81 cents a day earlier.
    Meanwhile, cash premiums for 10-ppm gasoil GO10-SIN-DIF dropped to 51 cents a barrel to
Singapore quotes on Wednesday, down from 67 cents per barrel in the previous session.
    The front-month time spread for 10 ppm gasoil flipped into a contango for the
first time in more than two weeks to trade at a discount of 32 cents a barrel, compared with a
premium of 17 cents on Tuesday, Refinitiv Eikon data showed.
    - Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 8.4% to 5 million
barrels in the week ended June 22, data via S&P Global Platts showed.
    - The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020, compared
with a weekly average of 2.4 million barrels in 2019, Reuters calculations showed.
    - Meanwhile, U.S. distillate fuel inventories fell by 2.6 million barrels, compared with
expectations for a decrease of 620,000 barrels, data from industry group the American Petroleum
Institute (API) showed on Tuesday.
    - One jet fuel trade, no gasoil deals
    - Singapore's Hin Leong Trading (Pte) Ltd has no future as an independent company after it
"grossly overstated" the value of its assets by at least $3 billion, according to a preliminary
report prepared by a court-appointed supervisor.
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               46.84    -1.14      -2.38       47.98  GO-SIN
 GO 0.5 Diff                     -1.26    -0.16      14.55       -1.10  GO-SIN-DIF
 Spot Gas Oil 0.25%              47.48    -1.14      -2.34       48.62  GO25-SIN
 GO 0.25 Diff                    -0.62    -0.16      34.78       -0.46  GO25-SIN-DIF
 Spot Gas Oil 0.05%              48.37    -1.14      -2.30       49.51  GO005-SIN
 GO 0.05 Diff                     0.27    -0.16     -37.21        0.43  GO005-SIN-DIF
 Spot Gas Oil 0.001%             48.61    -1.14      -2.29       49.75  GO10-SIN
 GO 0.001 Diff                    0.51    -0.16     -23.88        0.67  GO10-SIN-DIF
 Spot Jet/Kero                   43.03    -1.46      -3.28       44.49  JET-SIN
 Jet/Kero Diff                   -0.79     0.02      -2.47       -0.81  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 Sherry Jacob-Phillips)
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