Asia Middle Distillates: Key Market Indicators For Feb 21-25


Asian middle distillates are expected to be rangebound for the Feb. 21-25 trading week as tight supply continues to support the complex, while see-sawing geopolitical tensions between Russia and the West created uncertainty around the market outlook.

At 10:00 am Singapore time (0200 GMT), the front-month April ICE Brent crude oil futures contract was at $92.84/b, up 58 cents/b (0.63%) from the Feb. 18 Asian close, says an article published in Platts.

Jet fuel/Kerosene

Support for Asian jet fuel/kerosene likely to persist over the coming week, with tight regional supply continuing to bolster sentiment amid an open arbitrage to move cargoes west. Market participants said upcoming turnarounds in Northeast Asia, which is expected to exacerbate the tight supply situation, as well as ongoing geopolitical tensions could lend further support.

Brokers pegged front month March-April jet fuel/kerosene time spread at plus $1.41/b at 0200 GMT Feb. 21, narrowing 12 cents/b from plus $1.53/b at the 0830 GMT Asian close Feb. 18, Platts data showed.

The FOB Singapore jet fuel/kerosene cash differential was assessed at plus $1.23/b to the Mean of Platts Singapore jet fuel/kerosene assessments at the Feb. 18 close, down 4 cents week on week, Platts data showed.

Japan’s kerosene stocks dropped 10.8% week on week to 8.97 million barrels Feb.12, according to the Petroleum Association of Japan data released Feb. 16. Kerosene stocks fell as output hiked 10.8% week on week to 2.4 million barrels over Feb. 6-12. Japan’s kerosene demand is estimated to have risen 13% year on year in February due to colder weather versus a year ago, Petroleum Association of Japan President Tsutomu Sugimori said Feb. 17.

The Q1-Q2 jet fuel/kerosene swap spread averaged plus $3.06/b over Feb. 14-18, up from $2.45/b the week before.


Tight supplies are expected to continue to place a floor under the Asian gasoil complex, while escalating geopolitical tensions between Russia and the West over Ukraine could prop the market further. The steep backwardation and high flat prices continue to incentivize buyers to delay purchases, which could cool the market.

Brokers pegged front-month March-April Singapore gasoil at plus $2.16/b at 0200 GMT Feb. 21, narrowing 9 cents/b from plus $2.25/b at the 0830 GMT Asian close Feb. 18.

The March EFS spread was pegged at minus $18.50/b at 0200 GMT Feb. 21, narrowing $2.28/b from minus $20.78/mt at the Feb. 18 close.

Singapore’s commercial middle distillate stockpiles were up 0.26% week on week at 7.46 million barrels over Feb. 10-16, hovering around 4-week lows, Enterprise Singapore data released late Feb. 17 showed. The drop came amid a backwardation at the prompt of the Singapore gasoil derivative time spread.

The Q1-Q2 gasoil swap spread averaged plus $3.95/b Feb. 14-18, widening from plus $3.27/b the week before.

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Source: Platts


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