SINGAPORE, Dec 20 (Reuters) - Asia's cash differentials for jet fuel narrowed their
discounts marginally on Friday, but posted their biggest weekly drop in 1-1/2 months, hurt by
muted demand amid adequate supplies.
Cash discounts for jet fuel were at 11 cents per barrel to Singapore quotes,
compared with a discount of 12 cents a barrel on Thursday.
The cash differentials for aviation fuel, however, have dropped about 128% this week as they
flipped into discounts on Wednesday.
Traders were concerned winter heating demand for kerosene, which belongs to the same grade
of oil products as jet fuel, would likely remain weak due to warmer-than-usual temperatures this
year.
Refining margins or cracks of jet fuel, which also determines the profitability
of closely-related kerosene, were at $15.09 per barrel over Dubai crude during Asian trading
hours, compared with $14.72 per barrel a day earlier.
"The latest jet demand data has been poor, and mild weather in Asia is adding to the
downward pressure on jet markets despite lower crude runs thus far," consultancy Energy Aspects
said in its December note.
Winter in the Northern hemisphere typically brings strong heating demand for kerosene,
especially in Japan, but temperatures in Tokyo are expected to stay mostly above normal for the
next couple of weeks, weather forecast models on Refinitiv Eikon showed.
"Some support will come from winter kerosene heating demand eventually surfacing in North
Asia and peak air transport demand taking place in China over Lunar New Year, although weak
passenger and freight growth will create substantial headwinds," Energy Aspects added.
Meanwhile, refining margins for gasoil with 10 ppm sulphur content rose to
$15.52 per barrel over Dubai crude on Friday, up from $15.20 a barrel on Thursday.
Cash premiums for 10ppm gasoil were at 77 cents per barrel over Singapore
quotes, up from Thursday's 74 cents per barrel.
CLEAN SHIPPING FUEL RULES AND POLICING
- Sweeping new fuel rules aiming to cut pollution belching from ships and save lives are now
just a couple of weeks away but with no central policing agency and several countries still not
signed up to them, compliance is a major concern.
- From January 2020, ships must use fuel with a sulphur content of 0.5%, down from 3.5%, or
install devices that strip out the toxic pollutant - known as scrubbers.
- But enforcement of the United Nations convention on cleaner fuels — known as MARPOL Annex
VI — rests with individual countries and flag states, meaning for some routes and regions,
compliance is already looking patchy.
INDIA CUTS 2019/20 FUEL DEMAND ESTIMATES
- India's fuel demand is expected to rise 1.3% in 2019-20, its slowest pace in six years,
with the petroleum ministry on Thursday revising down its initial projections amid a broader
economic slowdown.
- Fuel consumption — a proxy for oil demand — in India is seen at 216 million tonnes in the
fiscal year to March 2020, about 3.3 million tonnes lower than initial estimates, the data
posted on the Petroleum Planning and Analysis Cell showed.
- A sharp reduction in diesel consumption — about two-fifths of overall refined fuel demand,
and directly linked to industrial activity — has dragged down the country's overall refined fuel
demand in this fiscal year.
ARA STOCKS
- Gasoil stocks independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and
storage hub slipped 1.7% to 2.4 million tonnes in the week to Dec. 19, data from
Dutch consultancy Insights Global showed.
- Gasoil stocks fell as demand from inland locations was steady.
- ARA jet fuel inventories fell 7% to 629,000 tonnes, the data showed.
- Compared with a year earlier, jet fuel stocks were 5.2% higher, while gasoil inventories
were up 14.3%.
SINGAPORE CASH DEALS
- Two gasoil trades, no jet fuel deals.
- For more information, please click
OTHER NEWS
- Oil prices held steady near three-month highs, heading for a third consecutive weekly
rise, on the back of easing Sino-U.S. trade tensions that have weighed on demand as well as the
global economic growth outlook.
- Chinese marine fuel suppliers have signed up short-term deals to buy very low-sulphur fuel
oil from companies like oil major Shell, Germany's Uniper and U.S. commodities trader Freepoint
ahead of a new standard on emissions for the global shipping industry that kicks in on Jan. 1.
ASSESSMENTS
MID-DISTILLATES
CASH ($/T) ASIA CLOSE Change % Change Prev Close RIC
Spot Gas Oil 0.5% 78.62 1.06 1.37 77.56
GO 0.5 Diff -2.28 0.01 -0.44 -2.29
Spot Gas Oil 0.25% 79.22 1.06 1.36 78.16
GO 0.25 Diff -1.68 0.01 -0.59 -1.69
Spot Gas Oil 0.05% 80.44 1.05 1.32 79.39
GO 0.05 Diff -0.46 0.00 0.00 -0.46
Spot Gas Oil 0.001% 81.67 1.08 1.34 80.59
GO 0.001 Diff 0.77 0.03 4.05 0.74
Spot Jet/Kero 80.19 0.96 1.21 79.23
Jet/Kero Diff -0.11 0.01 -8.33 -0.12
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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