December 2, 2019 / 10:17 AM / 7 days ago

Asia Distillates-Gasoil refining margins hit 2-week high

    SINGAPORE, Dec 2 (Reuters) - Asian refining margins for 10ppm gasoil rose on Monday to their
strongest in two weeks, partly buoyed by expectations of firmer upcoming demand as a deadline
for switching to cleaner marine fuels closes in.
    Some refinery run cuts in the region is also partly helping to trim the availability of
gasoil supplies, trade sources said. 
    Refining margins, also known as cracks for 10 ppm gasoil climbed to $15.25 a
barrel over Dubai crude during Asian trading hours on Monday, their strongest since Nov. 18. The
gasoil cracks were $14.33 a barrel on Friday.
    New International Maritime Organization (IMO) rules from Jan. 1, 2020 prohibit ships from
using fuels containing more than 0.5% sulphur, compared with the current 3.5%, and some ship
owners would likely switch to marine gasoil (MGO) to adhere with the regulations.
    But market participants now increasingly expect cheaper very low sulphur fuel oil (VLSFO) to
take away some of this incremental demand for MGO as a replacement for high-sulphur fuel.
    Cash premiums for gasoil with 10 ppm sulphur content GO10-SIN-DIF rose to 19 cents a
barrel to Singapore quotes on Monday, helped by firmer deal values in the physical trade window
on Monday. They were at a premium of 5 cents a barrel on Friday.
    Meanwhile, cash differentials for jet fuel JET-SIN-DIF were at a discount of 36 cents per
barrel to Singapore quotes on Monday, compared with a discount of 50 cents a barrel on Friday.
    Refining profit margins for jet fuel rose to $14.91 per barrel over Dubai crude
on Monday, up from $13.93 a barrel in the previous session on Friday.
    
    ASIAN REFINERS STRIVE TO FINISH IMO PREPARATIONS
    - At SK Energy's largest refinery in South Korea, engineers are rushing to complete a new
processing unit ahead of schedule as the firm looks to boost sales of low-emission fuels before
new marine fuel standards take effect in just one month.
    - In Japan, the country's second-biggest refiner Idemitsu Kosan Co is taking a more
cautious stance, increasing capacity for low sulphur fuel oil (LSFO), but also relying on
blending to produce IMO2020 compliant bunker fuel.
    - The different approaches come as refiners across the world grapple with the shipping
industry's most drastic fuel transition since it moved from burning coal to oil early last
century. 
    
    SINGAPORE CASH DEALS
    - Two 10ppm gasoil trades, one jet fuel deal.
    - Unipec bought 150,000 barrels of 10 ppm gasoil from Total for Dec. 17-21 loading at a
premium of 30 cents a barrel to the balance of December Singapore quotes.
    - Unipec bought another 150,000 barrels of 10 ppm gasoil from Trafigura for Dec. 17-21
loading at a premium of 30 cents a barrel to Singapore quotes.
    - Singapore trader Hin Leong bought 210,000 barrels of jet fuel from BP for Dec. 17-21
loading at $74.10 per barrel.
    - For more information, please click
    
    OTHER NEWS
    - OPEC and allied oil producers will consider deepening their existing oil output cuts by
about 400,000 barrels per day (bpd) to 1.6 million bpd, Iraq's oil minister said on Sunday.

    - Oil prices rose more than 1% on Monday as signs of rising manufacturing activity in China
pointed to increasing fuel demand, and hints that OPEC may deepen output cuts at its meeting
this week indicated supply may tighten next year.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                         
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                71.59    -2.12      -2.88       73.71  GO-SIN
 GO 0.5 Diff                      -3.22     0.00       0.00       -3.22  GO-SIN-DIF
 Spot Gas Oil 0.25%               72.20    -2.13      -2.87       74.33  GO25-SIN
 GO 0.25 Diff                     -2.61    -0.01       0.38       -2.60  GO25-SIN-DIF
 Spot Gas Oil 0.05%               74.48    -2.13      -2.78       76.61  GO005-SIN
 GO 0.05 Diff                     -0.33    -0.01       3.12       -0.32  GO005-SIN-DIF
 Spot Gas Oil 0.001%              75.01    -1.97      -2.56       76.98  GO10-SIN
 GO 0.001 Diff                     0.19     0.14     280.00        0.05  GO10-SIN-DIF
 Spot Jet/Kero                    73.76    -2.33      -3.06       76.09  JET-SIN
 Jet/Kero Diff                    -0.36     0.14     -28.00       -0.50  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 Rashmi Aich)
  
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