Asian middle distillate markets are poised to extend bullish momentum into the Oct. 25-29 trading week as limited exports from Northeast Asia continue to lift sentiment for gasoil and jet fuel/kerosene, reports Platts.
At 10 am Singapore time (0200 GMT), the ICE December Brent crude oil futures contract stood at $86.16/b, up $1.39/b (1.64%) from the Oct. 22 Asian close.
Jet fuel/kerosene
Brokers pegged the front-month November-December jet fuel/kerosene time spread at plus 39 cents/b at 0200 GMT Oct. 25, widening from plus 31 cents/b at the 0830 GMT Asian close Oct. 22, S&P Global Platts data showed.
The FOB Singapore jet fuel/kerosene cash differential was assessed at plus 12 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments Oct. 22, up 4 cents/b from the start of the week, Platts data showed.
Industry participants are optimistic about the near-term demand outlook amid an increase in vaccinated travel lane arrangements and the easing of other pandemic restrictions as countries shift away from COVID elimination policies.
Australia has been easing coronavirus-related restrictions as it prepares to gradually reopen its domestic and international borders to fully vaccinated citizens and permanent residents, a move likely to lift jet fuel demand, the sources said. Australia’s borders have been closed since March 2020.
The country’s largest carrier Qantas Airways has brought forward the restart of international flights by two weeks to Nov. 1 following federal and state government decisions to reopen international borders.
Regional supply of jet fuel/kerosene is expected to tighten, with exports from Japan and South Korea falling as they begin to stockpile for the peak winter demand season.
The Q1-Q2 2022 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged plus $2.26/b over Oct. 18-22, up from plus $2.07/b the week before.
Gasoil
Brokers pegged the front-month November-December gasoil market structure pegged at plus $1.03/b at 0200 GMT Oct. 25, widening 7 cents/b from the 0830 GMT Asian close Oct. 22.
The November Exchange of Futures for Swaps spread was pegged at minus $16.20/mt at 0200 GMT Oct. 25, widening from minus $15.05/mt at the Oct. 22 Asian close, Platts data showed.
The Asian gasoil complex remains supported by tightening regional supply, traders said. China’s limited export quotas for gasoil and reduced outflows in November from key suppliers including Unipec and PetroChina will further exacerbate tight supply of ultra-low sulfur diesel, which was expected to persist until year end.
The supply crimp was being compounded by Indian and Persian Gulf gasoil barrels moving westward amid viable arbitrage economics.
Singapore’s middle distillate commercial stockpiles fell 5.13% week on week to a six-week low at 9.81 million barrels over Oct. 14-20, latest Enterprise Singapore data showed.
The city-state retained its position as a net gasoil exporter in the week with outflows of 234,522 mt; the bulk to Australia at 58,529 mt, Sri Lanka at 41,194 mt and Indonesia at 38,912 mt. Meanwhile, gasoil imports totaled 174,523 mt, mainly from Malaysia at 95,518 mt, South Korea at 69,767 mt and Thailand at 9,237 mt.
The Q1-Q2 2022 gasoil swap spread averaged plus $2.19/b over Oct. 18-22, up from plus $2.02/b the week before.
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Source: Platts
