Asian middle distillate markets over the Nov. 15-19 trading week are likely to remain supported, with healthy demand and tight availability fueling a steady rise in the complex over the past several sessions,
At 11:00 am Singapore time (0300 GMT), the ICE January Brent crude oil futures contract stood at $81.51/b, down 89 cents/b (1.08%) from the Nov. 12 Asian close.
Jet fuel/Kerosene
Brokers pegged the balance-month November-December jet fuel/kerosene time spread at plus 30 cents/b at 0225 GMT Nov. 15, down 8 cents/b from the 0830 GMT Asian close Nov. 12, S&P Global Platts data showed.
The FOB Singapore jet fuel/kerosene cash differential was assessed at plus 42 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments Nov. 12, near tripling from the start of the week at plus 15 cents/b, Platts data showed.
Industry sources maintained a bullish outlook as demand from the downstream aviation sector is expected to gain ground amid easing international border and travel restrictions, but participants noted the upward momentum seen in the preceding weeks could slow down, citing steady conditions in the flight operations. Aviation company OAG said Nov. 8 in its weekly report that global weekly scheduled airline capacity fell 3.1% on the week starting Nov. 8 to 75.4 million seats, 29.3% below the equivalent period in 2019.
Still, heating oil requirements during the peak winter season in the northern Hemisphere is likely to maintain a floor for jet fuel/kerosene prices, sources said.
The Q1-Q2 2022 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged plus $1.93/b over Nov. 8-12, down from plus $2.13/b the week before.
Gasoil
Brokers pegged the balance-month November-December gasoil market structure at plus 79 cents/b at 0300 GMT Nov. 15, down 5 cents/b from the 0830 GMT Asian close Nov. 12.
The December Exchange of Futures for Swaps spread was pegged at minus $16.15/mt at 0300 GMT Nov. 15, narrowing from minus $17.41/mt at the Nov. 12 Asian close, Platts data showed.
Fundamentals for Asian gasoil markets remain buoyant as the pace of trading activity picks up towards the end of the year, spurred by gradually easing restrictions across the region as more countries move towards transitioning to a policy of treating the virus as endemic. Rising vaccination rates have also aided the progress in gasoil demand recovery, with many countries ramping up activity across the transportation, travel, manufacturing and industrial sectors.
Market participants will also be keenly awaiting the release of more term supply tenders from suppliers, with the Northeast Asia gasoil term season having been kickstarted by Taiwan’s Formosa Petrochemical Corp. Platts reported Nov. 12 that the Taiwanese refiner concluded term contracts for the supply of 10 ppm and 500 ppm gasoil cargoes for 12 months starting January 2022 at a premium of around 38 cents/b and a discount of around 80 cents/b, respectively, both priced to the Mean of Platts Singapore gasoil assessments, FOB.
The Q1-Q2 2022 gasoil swap spread averaged plus $2.13/b over Nov. 8-12, down from plus $2.24/b the week before.
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Source: Platts
