The Asian middle distillates complex was expected to face some downward pressure over May 17-20 from weak arbitrage economics, though recovering demand in most economies in the region, coupled with tight supply, continue to place a floor under the market, reports SP Global.
Jet fuel/Kerosene
The Asian jet fuel/kerosene market is expected to face some downward pressure from a strengthening ICE gasoil Exchange of Futures for Swaps, or EFS, over May 17-20. Traders typically use the EFS as a gauge when considering where to send cargoes loading from the Middle East and India and the EFS has been strengthening over the past week, making it unfavorable for traders to move cargoes to Europe.
In the downstream aviation sector, demand for jet fuel was holding up, with airlines scheduling more flights to meet a surge in demand from travel-starved passengers following the widespread reopening of regional aviation hubs and popular holiday destinations, according to market sources.
Brokers pegged the front month June-July jet fuel/kerosene time spread at plus $5.85/b at 0130 GMT May 17, up $2.06/b from the Asian close May 13, S&P Global Commodity Insights data showed.
The FOB Singapore jet fuel/kerosene cash differential was assessed at plus $2.44/b to the Mean of Platts Singapore jet fuel/kerosene assessment at the May 13 close, down 57.42% from the start of the week on May 9, S&P Global data showed.
The Q3-Q4 jet fuel/kerosene swap spread averaged plus $9.88/b over May 9-13, down 4 cents/b from the week before.
Gasoil
The Asian gasoil complex was expected to be largely rangebound in the week ahead as tight supply availability continues to place a floor under the market, while gradually recovering regional demand further bolsters sentiment. However, closed arbitrage lanes to Europe amid a slim EFS spread could see the market ease slowly, sources said.
Brokers pegged the June-July Singapore gasoil spread at plus $5.85/b at 0130 GMT May 17, up 41 cents/b from the Asian close May 13.
The June EFS spread was pegged at minus $14.50/mt at 0130 GMT May 17, widening $3.74/mt from the May 13 close.
Singapore’s onshore commercial middle distillate stocks rose 22.59% week on week to 7.42 million barrels May 11, rebounding from an 8-year low of 6.06 million barrels the week before, Enterprise Singapore data released May 12 showed. Gasoil outflows totaled 257,802 mt over May 5-11, outpacing inflows of 142,459 mt, the data showed.
The Q3-Q4 gasoil swap spread averaged plus $10.63/b over May 9-13, down 63 cents/b from the week before.
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Source: SP Global
