November 28, 2019 / 10:57 AM / 10 days ago

Asia Distillates-Gasoil refining margins slip, front-month spread widens

    SINGAPORE, Nov 28 (Reuters) - Asian refining margins for 10ppm gasoil dropped on Thursday,
weighed down by ample regional supplies, while the front-month spread for the industrial fuel
grade widened its backwardation.
    Refining margins or cracks for 10 ppm gasoil slipped to $14.68 a barrel over
Dubai crude, down from $14.80 a barrel on Wednesday.
    Cracks for the benchmark gasoil grade in Singapore have come under pressure over the last
one month amid weaker domestic demand in India and China.
    At least six LR2 tankers have been booked in recent days, each carrying a 90,000 tonne
diesel cargo, to load in the Mideast Gulf, India and Asia Pacific in the first half of December
with delivery options to Europe, shipping reports showed.
    But the gasoil market in the region is expected to get a major boost in coming weeks as the
shipping industry switches to cleaner marine fuels starting in January.
    New regulations from the International Maritime Organization (IMO) require shippers to
reduce the sulphur content in fuels used in their vessels from next year, and a section of
ship-owners is expected to switch to marine gasoil (MGO) to comply with the rules.
    The December/January time spread for 10ppm gasoil widened for a third
consecutive session to a three-week high of 29 cents a barrel on Thursday, compared with 20
cents a day earlier.
    Backwardation, when the front-month contract is more expensive than subsequent months, makes
it uneconomical to store the product and leads to a drawdown in inventories. It is usually seen
as a sign that prices are likely to head higher in future months.
    Meanwhile, cash differentials for jet fuel JET-SIN-DIF narrowed their discounts to 51
cents per barrel to Singapore quotes on Thursday, compared with a discount of 61 cents a barrel
on Wednesday.
    Refining profit margins for jet fuel inched lower by 15 cents to $14 per barrel
over Dubai crude on Thursday.
    
    SINGAPORE INVENTORIES
    - Singapore onshore middle distillate stocks fell 6.2% to 10.9 million barrels in the week
ended Nov. 27, Enterprise Singapore data showed.
    - Weekly middle distillate inventories have averaged 11.1 million barrels so far this year,
having averaged 9.6 million barrels a week in 2018, Reuters calculations showed.
    - Overall, onshore middle distillate inventories were 1.3% higher year-on-year.
    - Light distillate stocks rose 397,000 barrels to a three-week high of 11.2 million barrels
in the week ended on Wednesday, while fuel oil stocks rose 954,000 barrels to a four-week high
of 21.8 million barrels, Enterprise Singapore data showed.
    
    EIA INVENTORIES
    - U.S. crude oil stockpiles rose last week as the nation's production hit another record,
while gasoline inventories jumped sharply, the Energy Information Administration (EIA) said on
Wednesday.
    - Crude inventories rose by 1.6 million barrels in the week ended Nov. 22,
compared with analysts' expectations in a Reuters poll for a decrease of 418,000 barrels.

    - Refinery crude runs fell by 101,000 bpd as utilization rates
fell by 0.2 percentage point to 89.3% of total capacity, EIA data showed.
    - After nine straight weeks of builds, distillate stockpiles, which include
diesel and heating oil, rose 725,000 barrels, close to expectations for a 750,000-barrel
increase, the EIA data showed.
    
    SINGAPORE CASH DEALS
    - One 10ppm gasoil trade, no jet fuel deals.
    - Vitol bought 150,000 barrels of 10 ppm gasoil from BP for Dec. 21-25 loading at a parity
to December Singapore quotes.
    - For more information, please click
    
    OTHER NEWS
    - Russia is likely to call on fellow oil producers to change the way Moscow's output is
measured when most of the world's biggest oil-producing nations meet next month in Vienna,
Russian and OPEC sources said.
    - Oil prices fell on Thursday, extending losses from the previous session after official
data showed U.S. crude and gasoline stocks rose against expectations as production hit a record.

    
    ASSESSMENTS
 MID-DISTILLATES                                                                        
 CASH ($/T)            ASIA CLOSE        Change   % Change    Prev      RIC
                                                              Close     
 Spot Gas Oil 0.5%                73.41    -0.59       -0.80     74.00  GO-SIN
 GO 0.5 Diff                      -3.22     0.03       -0.92     -3.25  GO-SIN-DIF
 Spot Gas Oil 0.25%               73.98    -0.39       -0.52     74.37  GO25-SIN
 GO 0.25 Diff                     -2.65     0.23       -7.99     -2.88  GO25-SIN-DIF
 Spot Gas Oil 0.05%               76.31    -0.59       -0.77     76.90  GO005-SIN
 GO 0.05 Diff                     -0.32     0.03       -8.57     -0.35  GO005-SIN-DIF
 Spot Gas Oil 0.001%              76.76    -0.67       -0.87     77.43  GO10-SIN
 GO 0.001 Diff                     0.13    -0.05      -27.78      0.18  GO10-SIN-DIF
 Spot Jet/Kero                    75.62    -0.40       -0.53     76.02  JET-SIN
 Jet/Kero Diff                    -0.51     0.10      -16.39     -0.61  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 and Roslan Khasawneh; Editing by Shounak Dasgupta)
  
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