December 30, 2019 / 11:29 AM / 2 months ago

Asia Distillates-Gasoil cracks rise to highest in over seven weeks

    SINGAPORE, Dec 30 (Reuters) - Asian refining margins for 10 ppm gasoil climbed to their
highest in over a month on Monday, buoyed by expectations of firmer near-term demand as the
shipping industry switches to cleaner marine fuels from Jan. 1.
    Refining profit margins, also known as cracks, for gasoil with 10 ppm sulphur content
 rose to $16.06 per barrel over Dubai crude during Asian trading hours, a level not
seen since Nov. 7. They were at $15.67 per barrel on Friday.
    Cracks for the benchmark gasoil grade in Singapore have risen about 7% over the last couple
of weeks and are currently at their strongest seasonal level in the last five years, Refinitiv
Eikon data showed.
    The marine gasoil (MGO) market would likely get a major boost over the next few months as
new International Maritime Organization (IMO) rules prohibit ships from using fuels containing
more than 0.5% sulphur, compared with 3.5% through the end of December.
    Though very low-sulphur fuel oil (VLSFO) has been the primary choice of ship owners in the
fuel switch, traders expect MGO demand to pick up as more and more ships seek compliant fuel and
VLSFO stocks get depleted.
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF were at 85 cents per barrel over Singapore
quotes on Monday, compared with 91 cents per barrel on Friday.
    The front-month time spread for 10 ppm gasoil, which have remained in firm
backwardation over the last one month, widened on Monday to trade at a premium of 70 cents per
    Backwardation, when the front-month contract is more expensive than subsequent months, makes
it uneconomical to store the product, resulting in a drawdown in inventories. It is usually seen
as a sign that prices are likely to head higher in future months.
    Meanwhile, cash premiums for jet fuel JET-SIN-DIF were at 20 cents per barrel to Singapore
quotes on Monday, compared with a premium of 27 cents per barrel on Friday.
    Cracks for jet fuel jumped 39 cents to $14.61 per barrel over Dubai crude on
    - Two jet fuel trades, no gasoil deals.
    - BP sold 100,000 barrels of jet fuel to Singapore trader Hin Leong for Jan. 19-23, loading
at a premium of 10 cents per barrel to Singapore quotes.
    - Hin Leong sold 245,000 barrels of jet fuel to CAO for Jan. 21-25, loading at $80.78 per
    - For more information, please click
    - Oil prices hovered around three-month highs on Monday following a higher-than-expected
crude inventory drawdown and optimism over an expected U.S.-China trade deal, while traders kept
a close eye on Middle East unrest.
    - The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, may
consider wrapping up their oil output reduction in 2020, Russian Energy Minister Alexander Novak
said on Friday.

 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                 80.04     0.05       0.06       79.99  GO-SIN
 GO 0.5 Diff                       -2.06     0.05      -2.37       -2.11  GO-SIN-DIF
 Spot Gas Oil 0.25%                80.67     0.07       0.09       80.60  GO25-SIN
 GO 0.25 Diff                      -1.43     0.07      -4.67       -1.50  GO25-SIN-DIF
 Spot Gas Oil 0.05%                81.94     0.06       0.07       81.88  GO005-SIN
 GO 0.05 Diff                      -0.16     0.06     -27.27       -0.22  GO005-SIN-DIF
 Spot Gas Oil 0.001%               82.96    -0.05      -0.06       83.01  GO10-SIN
 GO 0.001 Diff                      0.85    -0.06      -6.59        0.91  GO10-SIN-DIF
 Spot Jet/Kero                     80.96     0.01       0.01       80.95  JET-SIN
 Jet/Kero Diff                      0.20    -0.07     -25.93        0.27  JET-SIN-DIF
 For a list of derivatives prices, including margins, please double                       
 click the RICs below.                                                    
 Brent M1                                                                                 
 Gasoil M1                                                                                
 Gasoil M1/M2                                                                             
 Gasoil M2                                                                                
 Regrade M1                                                                               
 Regrade M2                                                                               
 Jet M1                                                                                   
 Jet M1/M2                                                                                
 Jet M2                                                                                   
 Gasoil 500ppm-Dubai                                                                      
 Cracks M1                                                                
 Gasoil 500ppm-Dubai                                                                      
 Cracks M2                                                                
 Jet Cracks M1                                                                            
 Jet Cracks M2                                                                            
 East-West M1                                                                             
 East-West M2                                                                             
 LGO M1                                                                                   
 LGO M1/M2                                                                                
 LGO M2                                                                                   
 Crack LGO-Brent M1                                                                       
 Crack LGO-Brent M2                                                                       
 (Reporting by Koustav Samanta; Editing by Anil D'Silva)
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