June 2, 2020 / 10:56 AM / a month ago

Asia Distillates-Gasoil cash differentials turn positive on hopes of demand recovery

    SINGAPORE, June 2 (Reuters) - Asia's cash differentials for 10 ppm gasoil flipped into
premiums for the first time in 11 weeks on Tuesday, buoyed by hopes that regional demand would
gather steam over the next few weeks as more countries ease coronavirus-led lockdowns.
    Lack of arbitrage opportunities, however, weighed on market sentiments and capped further
gains in the market for the industrial and transportation fuel.
    Cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a premium of 24 cents a barrel
to Singapore quotes, their strongest since March 11. They were at a discount of 36 cents per
barrel on Monday.
    The prompt-month time spread for 10 ppm gasoil turned into backwardation for
the first time since March 19, to trade at a premium of 14 cents a barrel on Tuesday, Refinitiv
data showed.
    The exchange of futures for swaps (EFS), which determines the gasoil price spread between
Singapore and Northwest Europe, traded at minus $3.76 per tonne on Tuesday,
Refinitiv Eikon data showed. This typically makes the arbitrage shipments unworkable. 
    Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below,
though it depends on other factors such as freight rates as well, traders said.
    - India's gasoline and gasoil sales jumped sharply in May compared with April, in recovery
from historic lows after a partial easing of the lockdown imposed to curb the coronavirus
pandemic, provisional sales data showed on Monday.
    - But industry analysts expect a full-scale recovery to pre-COVID-19 consumption levels in
India to be months away as the monsoon season approaches while manufacturing activities remain
low and transportation demand takes a hit in some parts of the country.
    - "Almost the whole of the second quarter would have gone in lockdown... Third-quarter
growth may well be stunted as the markets slowly recover from the impact of the shutdowns. I
think Q4 would be more or less back to business as usual with standard growth rates," said
Sukrit Vijayakar, director of Indian energy consultancy Trifecta.
    - No jet fuel trade, no gasoil deal
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               40.39     1.35       3.46       39.04  GO-SIN
 GO 0.5 Diff                     -2.51     0.82     -24.62       -3.33  GO-SIN-DIF
 Spot Gas Oil 0.25%              41.29     1.35       3.38       39.94  GO25-SIN
 GO 0.25 Diff                    -1.61     0.82     -33.74       -2.43  GO25-SIN-DIF
 Spot Gas Oil 0.05%              42.01     1.24       3.04       40.77  GO005-SIN
 GO 0.05 Diff                    -0.89     0.71     -44.38       -1.60  GO005-SIN-DIF
 Spot Gas Oil 0.001%             43.14     1.13       2.69       42.01  GO10-SIN
 GO 0.001 Diff                    0.24     0.60    -166.67       -0.36  GO10-SIN-DIF
 Spot Jet/Kero                   38.79     1.23       3.27       37.56  JET-SIN
 Jet/Kero Diff                   -0.24     0.28     -53.85       -0.52  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 Ramakrishnan M.)
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