March 24, 2020 / 10:48 AM / 12 days ago

Asia Distillates-Grounded flights keep jet fuel cracks under pressure

    SINGAPORE, March 24 (Reuters) - Asian refining margins for jet fuel crawled up on Tuesday, a
day after plunging to a negative territory for the first time in more than eleven years.
    Traders, however, remained concerned the worst is yet to be seen as airlines globally
continued to ground flights on international and domestic routes amid stringent travel
restrictions to contain the coronavirus pandemic.
    Refining margins or cracks for jet fuel were at 62 cents per barrel over Dubai
crude during Asian trade, compared with minus 7 cents per barrel a day earlier. Monday's cracks
were the lowest in last 11 years, according to Refinitiv Eikon data that goes back as far as
March 2009. 
    Traders said the jet fuel market would remain under pressure at least until the third
quarter, assuming the spread of the virus is contained by then.
    Prices and profit margins for motor and aviation fuels globally have taken a beating from a
plunge in demand as countries enforce lockdowns and airlines are forced to ground planes,
forcing more refineries to reduce output.
    "We expect jet/kero demand to remain pressured long after other transportation fuels start
seeing a recovery," said Richard Gorry, managing director at JBC Energy Asia.
    "Global air travel activity is likely to remain limited even after individual countries and
regions have seen containment measures ease." 
    JBC Energy expects global jet fuel demand to fall by 4.3 million barrels per day (bpd)
quarter-on-quarter in second quarter of 2020 to just 2.5 million bpd, which represents a
year-on-year decline of 5.6 million bpd or 70% as air passenger travel activity is reduced to a
minimum.
    Cash discounts for jet fuel JET-SIN-DIF widened to $1.71 per barrel to Singapore quotes on
Tuesday, the widest since January last year. They were at a discount of $1.64 per barrel on
Monday.
    Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF narrowed their discounts by a
cent to 23 cents per barrel to Singapore quotes on Tuesday.
    Cracks for gasoil with 10 ppm sulphur content climbed to $10.12 per barrel
over Dubai crude on Tuesday, up from $9.60 per barrel on Monday.
    
    CORONAVIRUS SHOCKWAVE ROCKS AIRPLANE MANUFACTURERS, SUPPLIERS
    - The pandemic is taking its toll on aerospace manufacturing, as Boeing Co announced
it would halt production of most widebody jets and Airbus SE restarted only partial
output after a four-day shutdown as suppliers cut jobs.
    - With airlines unable to fly because of a collapse of demand over fears of contagion,
reinforced by air travel restrictions, planemakers and their suppliers are under pressure to
save cash to ride out a squeeze on liquidity.
    - Global passenger capacity fell by 35% last week, the worst since the start of the crisis,
according to data from airline schedules firm OAG, which said deeper cuts were likely in the
coming weeks.
    
    TENDERS
    - India's Mangalore Refinery and Petrochemicals Ltd (MRPL) has offered 65,000 tonnes of high
speed diesel (HSD) -- gasoil with 10 ppm sulphur content -- for April 1-3 loading from the port
of New Mangalore.
    - The tender closes on March 25 and has a same-day validity.
    - For more such information, please click
    
    SINGAPORE CASH DEALS
    - No jet fuel trades, no gasoil deals
    - For more information, click
    
    OTHER NEWS
    - China's gasoline exports in the first two months of 2020 surged 31.5% from a year earlier
as the coronavirus outbreak dented demand for fuels in the country. China's jet kerosene exports
jumped 21.1% to 2.93 million tonnes in the first two months, the customs data showed.

    - Barclays slashed its oil price forecasts for 2020, citing considerable downward pressure
on the market from a Saudi-Russian price war and demand disruption due to the coronavirus. The
bank lowered its 2020 price outlook for Brent and West Texas Intermediate by $12 each to $31 and
$28 per barrel respectively.

    ASSESSMENTS
 MID-DISTILLATES                                                                       
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               37.68     2.35       6.65       35.33  GO-SIN
 GO 0.5 Diff                     -2.03     0.01      -0.49       -2.04  GO-SIN-DIF
 Spot Gas Oil 0.25%              37.92     2.35       6.61       35.57  GO25-SIN
 GO 0.25 Diff                    -1.79     0.01      -0.56       -1.80  GO25-SIN-DIF
 Spot Gas Oil 0.05%              38.61     2.35       6.48       36.26  GO005-SIN
 GO 0.05 Diff                    -1.10     0.01      -0.90       -1.11  GO005-SIN-DIF
 Spot Gas Oil 0.001%             39.48     2.35       6.33       37.13  GO10-SIN
 GO 0.001 Diff                   -0.23     0.01      -4.17       -0.24  GO10-SIN-DIF
 Spot Jet/Kero                   28.53     2.51       9.65       26.02  JET-SIN
 Jet/Kero Diff                   -1.71    -0.07       4.27       -1.64  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 Sherry Jacob-Phillips)
  
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below