Upswing Supply : Asia Middle Distillates


Downward pressure loomed in Asian middle distillates markets for the July 12-15 trading week as rising supply from high refinery production volumes for gasoil and jet fuel weakened sentiment for both products, says an article published in S&P Global.

Front-month September ICE Brent crude oil futures stood at $106.32/b at 10 am Singapore time (0200 GMT) July 12, up 21 cents/b (0.2%) from the 0430 GMT Singapore close on July 8.

Jet Fuel/kerosene

Demand in the Asian jet fuel/kerosene market was holding steady as more COVID-19-related restrictions were lifted, but the outlook for further demand recovery was patchy in the second half of the year as closed arbitrage lanes to the West and increasing production fueled concerns of a potential build-up in regional supply, traders said.

However some market participants were more optimistic, saying the potential for arbitrage economics to improve and the commencement of seasonal stockpiling for winter in the coming months may provide some relief.

Brokers pegged the balance month July-August jet fuel/kerosene time spread at plus 75 cents/b at 0200 GMT July 12, narrowing from plus 85 cents/b at the July 8 Asian close, S&P Global Commodity Insights data showed.

Platts assessed the FOB Singapore jet fuel/kerosene cash differential at plus 41 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessment July 8, down $1.27/b or 75.6% from the start of the week, S&P Global data showed.

The Q3-Q4 jet fuel/kerosene swap spread averaged plus $11.74/b over July 4-8, down from plus $13.19/b the week before.


The Asian gasoil complex may continue to show signs of weakness over the coming week as refineries in the region maximize gasoil exports to capture still-high cracks.

Cash differentials for cargoes loading in the region have been under pressure as increasing exports from refineries in Northeast Asia, particularly South Korea, weigh on cash differentials for 10 ppm sulfur gasoil cargoes, traders said.

Brokers pegged the balance month July-August Singapore gasoil spread at plus $3.10/b at 0200 GMT July 12, up 12 cents/b from the Asian close July 8 at plus $2.98/b.

The August EFS spread was pegged at minus $32/mt at 0200 GMT July 12, down $26.49/mt from the July 8 close.

Singapore’s onshore commercial middle distillate stocks fell 3.28% week on week to 7.67 million barrels over June 30-July 6, Enterprise Singapore data released July 7 showed, on the back of healthy demand for gasoil and jet fuel.

Singapore remained a net exporter of gasoil over June 30-July 6, with outflows of 340,680 mt outpacing inflows of 83,573 mt by more than fourfold, the Enterprise Singapore data showed. The bulk of exports went to Australia at 142,839 mt, followed by Myanmar and Bangladesh at 78,482 mt and 37,997 mt, respectively.

The Q3-Q4 gasoil swap spread averaged plus $12.60/b over July 4-8, down from plus $15.92/b the week before.

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Source : S&P Global


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