Asia Middle Distillates: Key Market Indicators For Jan. 17-21

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Asian middle distillates started the Jan. 17-21 trading week on a firmer note amid sustained support from tight supply after Singapore’s middle distillate stocks touched an eight-year low during the week ended Jan. 12.

At 10:00 am Singapore time (0200 GMT), the ICE March Brent crude oil futures contract was at $86.54/b, up $1.59/b (1.87%) from the Jan. 14 Asian close, says an article published in Platts.

Jet Fuel/Kerosene

Asian jet fuel/kerosene continued to see support amid tight supply as refiners kept a lid on jet fuel production, resulting in low yields, traders said. Some seasonal heating demand in Northeast Asia also provided support.

Brokers pegged February-March jet fuel/kerosene time spread at plus $1.07/b at 0200 GMT Jan. 17, widening 14 cents/b from plus 93 cents/b at 0830 GMT Asian close on Jan. 14, Platts data showed.

The FOB Singapore jet fuel/kerosene cash differential was assessed at plus 81 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Jan. 14, up 28 cents/b, or 52.83%, in the span of just five trading days, Platts data showed.

Japan’s kerosene stocks fell 4.2% week on week to 13.45 million barrels as of Jan. 8, according to the Petroleum Association of Japan data released Jan. 13, as cold weather boosted heating demand. Japan’s kerosene output rose 32% to 2.88 million barrels in the week ended Jan. 8. The country’s kerosene exports were at 309,883 barrels, compared with no outflows in the prior week.

The Q1-Q2 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged plus $1.49/b over Jan. 10-15, doubling from plus 76 cents/b the week before.

Gasoil

The strong sentiment in the Asian gasoil market is expected to hold firmly in the week ahead, amid tight prompt supplies for 10 ppm sulfur gasoil cargoes and steady demand cues from most Asian economies.

Brokers pegged February-March Singapore gasoil at plus $1.54/b at 0200 GMT Jan. 17, steady from the 0830 GMT Asian close on Jan. 14.

The front month Exchange of Futures for Swaps spread was pegged at minus $15/mt at 0200 GMT Jan. 17, widening 45 cents/b from minus $14.55/mt at the Jan. 14 close, when it hit a six-week low, Platts data showed. The spread was last assessed lower on Dec. 3, 2021 at minus $16.57/mt at Asian close.

Singapore’s middle distillate stocks slid 11.98% over Jan. 6-12, to an eight-year low of 7.17 million barrels, from 8.15 million barrels recorded the previous week, Enterprise Singapore data released late Jan. 13 showed. The fall in inventory has come amid expectations of leaner supplies from key regional exporter China as it has issued limited export quotas. This is being met by healthy regional demand, fueling a bullish market sentiment.

The Q1-Q2 2022 gasoil swap spread averaged plus $1.96/b over Jan. 10-14, up from plus $1.33/b the week before.

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Source: Platts

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