June 5, 2020 / 11:04 AM / a month ago

Asia Distillates-Jet cash differentials post weekly gain as domestic flights aid demand

    SINGAPORE, June 5 (Reuters) - Asia's cash discounts for jet fuel widened on Friday
due to weak buying interest for physical cargoes, but the differentials posted a weekly
gain as aviation demand gradually recovers after hitting a nadir in April due to the
coronavirus restrictions.
    Cash discounts for jet fuel JET-SIN-DIF were at 32 cents a barrel to Singapore
quotes, compared with a discount of 22 cents on Thursday. Jet spot differentials have
climbed 58% this week.
    Global passenger air traffic has risen 30% in May from a very low level in April,
as airlines cut domestic fares to encourage customers to return, the International Air
Transport Association (IATA) said on Wednesday.
    "While this uptick is not significant to the global dimension of the air transport
industry, it does suggest that the industry has seen the bottom of the crisis, provided
there is no recurrence," the IATA said in a statement.
    A lingering concern that resumption of domestic flights will not be enough to
strengthen the market continues to weigh on sentiments, traders said.
    Consultancy JBC Energy said it expects Asia's total refined product demand in the
second half of 2020 to be about 1.5 million barrels per day lower from the same period
a year ago, of which around 900,000 bpd is accounted for by jet/kero.
    The impact on aviation demand is expected to last the longest and remain most
relatively severe, said Kostantsa Rangelova, lead Asia analyst at JBC Energy.
    Refining margins for jet fuel slipped to 35 cents a barrel over Dubai
crude on Friday, against 86 cents a day earlier.
    - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA)
refining and storage hub STK-GO-ARA jumped 5.5% to 2.8 million tonnes in the week to
June 4, data from Dutch consultancy Insights Global showed.
    - ARA jet fuel inventories STK-JET-ARA dropped 4.4% to 870,000 tonnes, the data
    - Compared with a year earlier, jet fuel stocks were 16.9% higher, while gasoil
inventories were up 0.5%.
    - No jet fuel trade, no gasoil deal
    - Brimming diesel inventories and stronger oil prices are driving down refining
profits, stifling incentives to hike production even as fuel demand recovers from the
coronavirus hammering.
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               40.88     0.25       0.62       40.63  GO-SIN
 GO 0.5 Diff                     -2.29    -0.04       1.78       -2.25  GO-SIN-DIF
 Spot Gas Oil 0.25%              41.78     0.25       0.60       41.53  GO25-SIN
 GO 0.25 Diff                    -1.39    -0.04       2.96       -1.35  GO25-SIN-DIF
 Spot Gas Oil 0.05%              42.56     0.29       0.69       42.27  GO005-SIN
 GO 0.05 Diff                    -0.62    -0.01       1.64       -0.61  GO005-SIN-DIF
 Spot Gas Oil 0.001%             43.34     0.28       0.65       43.06  GO10-SIN
 GO 0.001 Diff                    0.17    -0.02     -10.53        0.19  GO10-SIN-DIF
 Spot Jet/Kero                   39.47     0.61       1.57       38.86  JET-SIN
 Jet/Kero Diff                   -0.32    -0.10      45.45       -0.22  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 Uttaresh.V)
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