December 24, 2019 / 6:16 AM / a month ago

Asia Distillates-Jet fuel cash differentials return to premiums

    SINGAPORE, Dec 24 (Reuters) - Asia's cash differentials for jet fuel flipped back to
premiums on Tuesday, thanks to a slight uptick in buying interest for physical cargoes this
week, while refining margins for the aviation fuel dropped for a second session on ample
supplies.
    Cash differentials for jet fuel JET-SIN-DIF were at a premium of 13 cents per barrel to
Singapore quotes, compared with a narrow discount of 2 cents per barrel on Monday.
    Refining margins or cracks for jet fuel fell to $14.59 per barrel over Dubai
crude during Asian trade, down from $14.85 per barrel on Monday.
    The jet fuel cracks in Singapore were currently about 2.9% lower than its seasonal level for
this time of the year in the last three years, Refinitiv Eikon data showed.
    The likelihood of higher refinery runs in the wake of International Maritime Organization
(IMO) rules in 2020 would keep the jet fuel market well supplied in the near term, but Chinese
New Year holiday in January is expected nudge up some aviation demand, market participants said.
    New IMO rules require shippers to reduce the sulphur content in fuels used in their vessels
from next year, and refiners are expected to ramp up production in order to meet demand for
compliant fuels.
    Meanwhile, refining margins for gasoil with 10 ppm sulphur content dipped to
$15.27 per barrel over Dubai crude, down from $15.45 a barrel on Monday.
    Cash premiums for 10 ppm gasoil GO10-SIN-DIF fell to 67 cents per barrel over Singapore
quotes, hurt by muted demand for physical cargoes. They were at a premium of 78 cents a barrel
on Monday.
    
    SHIPPING FUEL OF CHOICE AHEAD OF IMO 2020
    - With a week until the implementation of IMO rules, shippers appear to be favouring very
low-sulphur fuel oil (VLSFO) mixes over distillate fuels.
    - The price differential between VLSFO and marine gasoil has narrowed sharply at various
major port locations around the world in recent weeks.
    - The IMO 2020 rules lower the ceiling on sulphur in ship fuel to 0.5% sulphur unless they
are equipped with exhaust-cleaning systems known as scrubbers, down from 3.5% currently.
    - In Singapore, the world's largest bunkering port, the difference in price between VLSFO
and marine gasoil, a distillate-based fuel that also satisfies the new sulphur requirement, was
at near parity late last week, around $650 a tonne, according to S&P Global Platts assessments.
This compares with $75 a tonne in early-September.
    
    INDONESIA LAUNCHES B30 BIODIESEL TO CUT COSTS
    -  Indonesia on Monday launched biodiesel containing 30% palm-based fuel, the highest
mandatory mix in the world, in a bid to slash its fuel import bill and boost domestic palm oil
consumption.
    - President Joko Widodo said so-called "B30" biodiesel would allow Indonesia to cut its
fossil fuel imports by 63 trillion rupiah ($4.5 billion) a year, up from 43.8 trillion rupiah
saved in 2019 from existing B20 fuels.
    - Indonesia, the world's biggest palm oil producer and exporter, has been gradually
increasing the bio content of its biodiesel, aiming to absorb growing supplies of palm oil while
also trimming costly fuel imports.
    
    SINGAPORE CASH DEALS
    - No gasoil trades, one jet fuel deal.
    - Singapore trader Hin Leong sold 100,000 barrels of jet fuel to BP for Jan. 19-23 loading
at $79.20 a barrel.
    - For more information, please click
    
    OTHER NEWS
    - Latin America's share of Indian oil imports plunged in November to its lowest in 20
months, tanker arrival data showed, as refiners bought similar heavier grades from the Middle
East to reduce shipping costs.
    India, the world's third largest oil consumer, bought about 390,400 barrels per day (bpd) of
Latin American oil during November, or 9.1% of the country's total imports, down from 12% in
October, the data from shipping and industry sources showed.
    - Oil prices edged higher after Russia's energy minister, Alexander Novak, said cooperation
with OPEC on supporting the market would continue and as analysts forecast a second weekly
decline in U.S. crude inventories.
    
    ASSESSMENTS
 MID-DISTILLATES                                                                          
 CASH ($/T)              ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                 77.99     0.36       0.46       77.63  GO-SIN
 GO 0.5 Diff                       -2.35    -0.08       3.52       -2.27  GO-SIN-DIF
 Spot Gas Oil 0.25%                78.59     0.36       0.46       78.23  GO25-SIN
 GO 0.25 Diff                      -1.75    -0.08       4.79       -1.67  GO25-SIN-DIF
 Spot Gas Oil 0.05%                79.81     0.36       0.45       79.45  GO005-SIN
 GO 0.05 Diff                      -0.53    -0.08      17.78       -0.45  GO005-SIN-DIF
 Spot Gas Oil 0.001%               81.01     0.33       0.41       80.68  GO10-SIN
 GO 0.001 Diff                      0.67    -0.11     -14.10        0.78  GO10-SIN-DIF
 Spot Jet/Kero                     79.79     0.51       0.64       79.28  JET-SIN
 Jet/Kero Diff                      0.13     0.15    -750.00       -0.02  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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