Asia’s diesel benchmarks extended gains on Friday, though the rally is now largely driven by sentiment rather than worsening supply tightness, market sources said.
The crack for benchmark 10ppm sulphur gasoil (GO10SGCKMc1) rose to a premium above $27 a barrel, back at its highest in one-and-a-half years again after a slight pare-back recently, data compiled by LSEG showed.
Market backwardation widened sharply to $3.80 a barrel for the /December timespread, based on indications from market sources.
“The crazy rally now is more due to sentiment rather than fundamentals,” said a distillates trader, adding that supply is tight but not as bad as it seems.
Another trader said that the rally is likely to fizzle out by the year end amid some slight rebound in China exports, which are still capped this month.
Despite quiet window trade, cash differentials for both gasoil and jet fuel were pegged higher on Friday amid a supportive market structure.
Meanwhile, the prompt regrade spread (JETREG10SGMc1) widened to a discount of 90 cents per barrel on the back of stronger gasoil performance.
SINGAPORE CASH DEALS
– No gasoil deal, no jet fuel deal.
INVENTORIES
– Middle distillate stockpiles in the ARA hub eased 3% to 2.20 million tons in the week to November 6, based on data from Dutch consultancy Insights.
REFINERY NEWS
– The Naftan oil refinery in Belarus, one of the country’s two biggest, is operating as normal after a fire broke out there, a senior manager at the plant said late on Thursday on Naftan’s official Telegram media channel.
OTHER NEWS
– Oil prices rose on Friday but remained on track for a second consecutive weekly loss after three days of declines on worries about excess supply and slowing U.S. demand.
– Gunvor said it has withdrawn its proposal to buy foreign assets of Russian energy company Lukoil after the U.S. Treasury called it Russia’s “puppet” and signaled Washington opposed the deal.
– Russia’s oil exports from western ports are expected to decrease slightly in November amid higher refinery runs, yet remain close to the record highs recorded over recent months, according to shipping and trading sources and estimates from Reuters.
– The volume of oil stored onboard ships in Asian waters doubled in recent weeks after tightening western sanctions hit imports from China and India and as a shortage of import quota curbed demand from independent Chinese refiners, analysts said.
Source: Reuters
