Asia Middle Distillates: Key Market Indicators for Dec 6-10

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Asian middle distillate markets started Dec. 6-10 slightly weaker than the previous trading week as participants awaited fresh pricing cues for gasoil and jet fuel/kerosene.

At 10 am Singapore time (0200 GMT), the ICE February Brent crude oil futures contract stood at $71.33/b, up $1.45/b (2.07%) from the Dec. 3 Asian close, says an article published in Platts.

Jet fuel/Kerosene

Brokers pegged the December-January jet fuel/kerosene time spread at plus 50 cents/b at 0200 GMT Dec. 6, narrowing 8 cents/b from plus 58 cents/b at 0830 GMT Asian close Dec. 3, S&P Global Platts data showed.

The FOB Singapore jet fuel/kerosene cash differential was assessed at plus 50 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessment Dec. 3, up from plus 30 cents/b from Nov. 29, Platts data showed.

The Asian jet fuel/kerosene market remains resilient as participants focus on the upcoming peak season for heating oil and tight regional supply, despite concerns stemming from the new COVID-19 variant, sources said.

The impact of government responses to the new omicron variant was a concern, the International Air Transport Association said in a report Dec. 1. “If it dampens travel demand, capacity issues will become more acute. After almost two years of COVID-19, governments have the experience and tools to make better data-driven decisions than the mostly knee-jerk reactions to restrict travel that we have seen to date,” IATA director General Willie Walsh said in the report.

The Q1-Q2 2022 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged plus 80 cents/b over Nov. 29-Dec. 3, down from plus $1.21/b the week before.

Gasoil

Brokers pegged the December-January gasoil market structure at plus 60 cents/b at 0200 GMT Dec. 6, narrowing 6 cents/b from the 0830 GMT Asian close Dec. 3.

The December Exchange of Futures for Swaps spread was pegged at minus $12.80/mt at 0200 GMT Dec. 6, narrowing from minus $16.57/mt at the Dec. 3 Asian close, Platts data showed.

The near-term outlook for Asian gasoil was subdued, industry sources said, with the diversion of arbitrage cargoes into the region and uneven demand recovery weighing on sentiment.

Singapore middle distillate stocks fell 5.24% week on week to a three-year low of 8.01 million barrels in the week ended Dec. 1, Enterprise Singapore data released Dec. 2 showed, aided by a recovery in regional demand. Singapore’s gasoil exports fell 37.09% on the week to 206,636 mt, while gasoil imports fell 30.43% to 228,198 mt.

The Q1-Q2 2022 gasoil swap spread averaged plus $1.04/b over Nov. 29-Dec. 3, down from plus $1.33/b the week before.

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Source: Platts

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