The Asian middle distillates complex was expected to see support over May 30-June 3 amid tight supply availability, particularly for jet fuel as opened arbitrage lanes pull barrels out of Asia, as well as a regional recovery in demand for middle distillates.
At 11 am Singapore time (0300 GMT), the front-month July ICE Brent crude oil futures contract stood at $/b, up $/b (2.29%) from the 0830 GMT Singapore close on May 27.
Jet /kerosene
** Opportunities to divert barrels from Asia and the Middle East to the west of Suez amid an open arbitrage window, coupled with firming demand ahead of the peak summer travel season, are expected to lend support to the Asian jet /kerosene market in the week.
** Easing COVID-19 movement controls in parts of China are poised to support the country’s jet fuel demand, which could reduce jet fuel exports in coming months, market participants said, China’s jet fuel outflows in April jumped 45.5% year on year to hit a two-year high of 960,000 mt, customs data showed, amid weak domestic demand.
** Brokers pegged the front month June-July jet /kerosene time spread at plus $/b at 0300 GMT May 30, narrowing from plus $/b at the May 27 Asian close, S&P Global Commodity Insights data showed.
** The FOB Singapore jet /kerosene cash differential was assessed at plus $/b to the Mean of Platts Singapore jet /kerosene assessments May 27, up 48 /b from the start of the week, S&P Global data showed.
** The Q3-Q4 jet /kerosene swap spread averaged plus $/b over May 23-27, up 82 /b from plus $/b the week before.
Gasoil
** Lean supply and rising regional demand could continue to lift the Asian gasoil market over May 30-June 3, even as an uneconomical East-West arbitrage leads to more Asian gasoil barrels remaining in the region.
** Brokers pegged the June-July Singapore gasoil spread at plus $/b at 0300 GMT May 30, widening 44 /b from the Asian close May 27.
** The June EFS spread was pegged at minus $/mt at 0300 GMT May 30, widening 16 /mt from the May 27 close.
** Singapore’s onshore commercial middle distillate stocks dipped 1.14% week on week to 7.29 million barrels in the week ended May 25, extending a downtrend into a third consecutive week, Enterprise Singapore data released May 26 showed. The city-state maintained its position as a net exporter of gasoil with outflows at 229,517 mt outpacing inflows of 112,454 mt in the week, Enterprise Singapore data showed.
** The Q3-Q4 gasoil swap spread averaged plus $/b over May 23-27, up 92 /b from plus $/b the week before.
