Oil report

Asia Distillates-Gasoil cracks rise to 8-week high; IMO 2020 comes into effect

    SINGAPORE, Jan 2 (Reuters) - Asian refining margins for
10ppm gasoil rose on Thursday to their strongest in eight weeks,
while cash premiums for the transportation fuel grade fell amid
weaker deals in the physical market.
    Traders, however, remain upbeat about firmer near-term
demand for marine gasoil (MGO) as ship-owners switch to cleaner
fuels to comply with the new International Maritime Organization
(IMO) rules on sulphur emissions from ships.
    Refining margins, also known as cracks, for gasoil with 10
ppm sulphur content rose to $16.18 per barrel over
Dubai crude during Asian trading hours, a level not seen since
Nov. 7. They were at $15.99 per barrel on Tuesday.
    Cracks for the benchmark gasoil grade in Singapore, which
have risen more than 6% in the last two weeks, are currently at
their strongest levels for this time of the year in the last
five years, Refinitiv Eikon data showed.
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF dropped to 56
cents per barrel over Singapore quotes on Thursday, compared
with a premium of 77 cents per barrel in the last trading
session on Tuesday.
    Meanwhile, refining margins for jet fuel jumped
to $15.09 per barrel over Dubai crude on Thursday, up from
$14.56 a barrel on Tuesday.
    Cash premiums for jet fuel JET-SIN-DIF were at 29 cents
per barrel to Singapore quotes on Thursday, compared with a
premium of 26 cents per barrel on Tuesday.
    - Tougher rules on sulphur emissions from ships came into
effect on Wednesday, in the biggest shake-up for the oil and
shipping industries for decades. From Jan. 1, United Nations
shipping agency the International Maritime Organization (IMO)
has banned ships from using fuels with a sulphur content above
0.5%, compared with 3.5% earlier.
    - Failure to comply with the global regulations will result
in fines or vessels being detained and in some jurisdictions the
risk of imprisonment, which could affect vital requirements such
as insurance cover.
    - Enforcement will be policed by flag and port states rather
than the IMO and industry officials are still unsure about
whether there will be full compliance when it kicks in.

    - While major fuel bunkering ports such as Singapore,
Fujairah in the United Arab Emirates and Rotterdam in the
Netherlands have compliant-fuel supplies, analysts and shipping
firms are still unclear what will happen at smaller ports given
the need for ships to plan their sailing routes.
    - As the global clean-fuel mandate takes effect, testing
companies examining newer, low-sulfur marine blends acquired in
Antwerp, Belgium, Houston and Singapore have found sediment at
levels that could damage the engines of ocean-going vessels.

    - Singapore onshore middle distillate stocks rose 2.8% to a
two-week high of 10.8 million barrels in the week to Jan. 1,
Enterprise Singapore data showed.
    - Weekly middle distillate inventories averaged 11.1 million
barrels in 2019, having averaged 9.6 million barrels a week in
2018, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 4.7%
lower year-on-year.
    - Light distillate stocks dropped 1.07 million barrels to a
four-week low of 11.6 million barrels in the week to Wednesday,
while fuel oil stocks rose 236,000 barrels to a three-week high
of 20.5 million barrels, Enterprise Singapore data showed.
    - Middle-distillate inventories in the Fujairah Oil Industry
Zone dropped 24.4% from a week earlier to 3.7 million barrels in
the week to Dec. 30, data via S&P Global Platts showed.

    - Stocks of middle distillates in the Fujairah oil hub have
averaged 2.4 million barrels in 2019, Reuters calculations
showed. This compares with a weekly average of 2.8 million
barrels in 2018.
    - Weekly Fujairah middle distillate stocks have more than
doubled, when compared with year-ago levels.
    - U.S. crude oil stocks fell in the most recent week while
gasoline inventories declined and distillate stocks rose, data
from industry group the American Petroleum Institute showed on
    - Crude inventories fell by 7.8 million barrels in the week
to Dec. 27, to 436 million barrels, compared with analysts'
expectations for a draw of 3.2 million barrels.
    - Distillate fuel inventories, which include diesel and
heating oil, rose by 2.8 million barrels, compared with
expectations for a 1.8 million-barrel gain, the data showed.
    - Three gasoil trades, no jet fuel deals.
    - For more information, please click
    - Oil prices kicked off the new year higher on Thursday as
warming trade relations between the United States and China
eased demand concerns, while rising tensions in the Middle East
fuelled worries about supply.
    - Oil prices are likely to hover around $63 a barrel next
year, a Reuters poll showed on Tuesday, benefiting from deeper
production cuts by OPEC and its allies, and hopes that a
U.S.-China trade deal could jumpstart economic growth.

 CASH ($/T)               ASIA CLOSE       Change   % Change   Prev Close   RIC
 Spot Gas Oil 0.5%                  78.74    -0.80      -1.01        79.54  GO-SIN
 GO 0.5 Diff                        -2.10    -0.05       2.44        -2.05  GO-SIN-DIF
 Spot Gas Oil 0.25%                 79.37    -0.80      -1.00        80.17  GO25-SIN
 GO 0.25 Diff                       -1.47    -0.05       3.52        -1.42  GO25-SIN-DIF
 Spot Gas Oil 0.05%                 80.69    -0.80      -0.98        81.49  GO005-SIN
 GO 0.05 Diff                       -0.15    -0.05      50.00        -0.10  GO005-SIN-DIF
 Spot Gas Oil 0.001%                81.40    -0.96      -1.17        82.36  GO10-SIN
 GO 0.001 Diff                       0.56    -0.21     -27.27         0.77  GO10-SIN-DIF
 Spot Jet/Kero                      80.20    -0.34      -0.42        80.54  JET-SIN
 Jet/Kero Diff                       0.29     0.03      11.54         0.26  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 Maju Samuel)