Asian middle distillates started the Jan. 24-28 trading week on a softer note as market participants await fresh cues after middle distillates stocks in the main trading hub of Singapore veered away from an eight-year low to climb to a nine-week high for the week ended Jan. 19, says a Platts MarketInsight article.
At 11:00 am Singapore time (0300 GMT), the ICE March Brent crude oil futures contract was at $88.65/b, up $1.99/b (2.29%) from the Jan. 21 Asian close.
Jet Fuel/Kerosene
Asian jet fuel/kerosene continued to experience tight supply due to refiners keeping a lid on production that resulted in low product yields, as well as some support from seasonal heating demand from Northeast Asia. Consumption levels from the aviation sector remained curtailed by pandemic-related border restrictions.
Brokers pegged February-March jet fuel/kerosene time spread at plus $1.08/b at 0300 GMT Jan. 24, widening 18 cents/b from plus 90 cents/b at 0830 GMT Asian close on Jan. 21, Platts data showed.
The FOB Singapore jet fuel/kerosene cash differential was assessed at plus 65 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Jan. 21, down 27 cents/b, or 29.34%, in the span of five trading sessions, Platts data showed.
Japan’s kerosene stocks fell 11.8% week on week to 11.86 million barrels as of Jan. 15, according to the Petroleum Association of Japan data released Jan. 19, as cold weather boosted heating demand. Japan’s kerosene output was down 10.8% to 2.57 million barrels in the week ended Jan. 15. The country’s kerosene exports surged 79.5% week on week to 894,690 barrels in the week.
The Q1-Q2 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged plus $1.76/b over Jan. 17-21, up from plus $1.49/b the week before.
Gasoil
While the gasoil complex was fundamentally supported by lean supply and stable demand from Asia, and increasingly viable arbitrage economics pulling swing barrels to the West, several market sources said the steepness of the backwardation earlier in the Jan. 17-21 trading week could have overestimated the strength in the physical market.
Brokers pegged February-March Singapore gasoil at plus $1.61/b at 0300 GMT Jan. 24, widening from plus $1.42/b at the 0830 GMT Asian close on Jan. 21.
The front month Exchange of Futures for Swaps spread was pegged at minus $14.57/b at 0300 GMT Jan. 24, widening 88 cents/b from minus $13.69/mt at the Jan. 21 close.
Singapore middle distillate stocks rose 18.9% over the Jan. 13-19 period to 8.53 million barrels, Enterprise Singapore data released late Jan. 20 showed. The rebound in stocks pushed middle distillate inventory levels to a nine-week high, with historical data showing that stocks were last higher at 9.16 million barrels in the week ended Nov. 17, 2021. The rise in inventory levels came amid robust gasoil cracks as well as a weak regrade, which may have worked to incentivize refiners to maximize production of gasoil.
The Q1-Q2 gasoil swap spread averaged plus $2.30/b over Jan. 17-21, up from plus $1.96/b the week before.
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Source: Platts
