November 10, 2017 / 11:13 AM / 14 days ago

Asia Distillates-Jet regrade slips from near 1-1/2 year high

    SINGAPORE, Nov 10 (Reuters) - Asia's November jet regrade, the relative strength of jet fuel
prices versus gasoil, slipped on Friday but remained near multi-month highs seen in the previous
session. 
    The November jet regrade slipped to $1.51 a barrel on Friday, down from $1.58 a barrel on
Thursday, its highest since May 2016, Reuters data showed. 
    Recent weakness in an gasoil market, coupled with relatively stronger jet fuel prices, have
helped boost the front-month regrade value, sources said. 
    
    REGRADE STRENGTH
    - "Singapore jet regrades surged over the past days, breaking above the five-year average for
the first time since June to also stand at a (year-to-date) high," said JBC Energy in a research
note on Friday. 
    - This comes amid a cold snap in Japan, together with weather forecasts for below-average
temperatures, which are likely boosting kerosene demand in the country at a time when the forward
demand cover is roughly 20 days lower than the seasonal average, said JBC, citing the Petroleum
Association of Japan.
    - "This is likely to support jet/kero cracks strength in Asia over the coming weeks and make the
arb to Europe more difficult to work," said JBC.  
    
    ARA INVENTORIES
    - Gasoil and jet fuel stocks in the Amsterdam-Rotterdam-Antwerp (ARA) oil hub were slightly
lower in the week to Nov. 9, PJK data showed.
    - ARA gasoil stocks slipped to 2.056 million tonnes, down 5 percent from the previous week and
30 percent lower from last year, the data showed. 
    - Gasoil stocks slipped as demand for heating oil in Germany picked up, PJK's Patrick Kulsen
said.
    - Jet fuel stocks were 4 percent lower from the previous week to 687,000 tonnes in the week to
Nov. 9. Compared to last year, ARA jet fuel stocks are up 6 percent, the data showed. 
    - Compared to last year, ARA fuel oil inventories are up 122 percent and are well above the
five-year average of 895,000 tonnes for this time of year.
     
    REFINING 
    - South Korean refiners are planning to spend over $5 billion on plant upgrades in response to
tighter rules on shipping fuel, boosting production of low-sulphur fuel oil as well as other
high-end products.
    - The refiners hope the investment, which comes ahead of the 2020 introduction of the new rules,
will make them one of the biggest beneficiaries of the new regulations, with many competitors still
waiting to commit to new spending.
    - Wood Mackenzie analyst Suresh Sivanandam said the changed regulations would lead to a rise in
demand for gasoil from the bunker sector and would push other refiners to look at investments or
blending to meet demand.
    
    - SINGAPORE CASH DEALS: One gasoil deal, no jet fuel trades.     
 MID-DISTILLATES                                                                                    
 CASH ($/T)                ASIA CLOSE           Change     % Change      Prev Close  RIC
 Spot Gas Oil 0.5%                       72.10       0.72          1.01       71.38  GO-SIN
 GO 0.5 Diff                             -1.51       0.02         -1.31       -1.53  GO-SIN-DIF
 Spot Gas Oil 0.25%                      72.39       0.72          1.00       71.67  GO25-SIN
 GO 0.25 Diff                            -1.22       0.02         -1.61       -1.24  GO25-SIN-DIF
 Spot Gas Oil 0.05%                      73.34       0.71          0.98       72.63  GO005-SIN
 GO 0.05 Diff                            -0.27       0.01         -3.57       -0.28  GO005-SIN-DIF
 Spot Gas Oil 0.001%                     74.59       0.72          0.97       73.87  GO10-SIN
 GO 0.001 Diff                            0.98       0.02          2.08        0.96  GO10-SIN-DIF
 Spot Jet/Kero                           75.08       0.62          0.83       74.46  JET-SIN
 Jet/Kero Diff                           -0.05      -0.02         66.67       -0.03  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 Roslan Khasawneh; Editing by Mark Potter)
  

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