June 3, 2020 / 10:53 AM / a month ago

Asia Distillates-Jet fuel cash discounts widen amid tepid demand

    SINGAPORE, June 3 (Reuters) - Asia's cash discounts for jet fuel widened on Wednesday amid
subdued activity in the physical market, while the prompt-month spread for the aviation fuel
deepened its contango structure.
    Run cuts and planned turnarounds at regional refineries have helped contain excess supplies
in the market, but traders remain concerned that it would take years for aviation demand to
return to pre-pandemic levels even as some domestic flights have resumed operations.
    Among refined products, jet fuel is expected to recover the slowest as cross-border travel
restrictions are mostly still in place, market watchers said.
    Cash discounts for jet fuel JET-SIN-DIF were at 25 cents a barrel to Singapore quotes on
Wednesday, compared with 24 cents a day earlier.
    The June/July time spread widened by 8 cents to trade at a discount of 40
cents a barrel on Wednesday, Refinitiv Eikon data showed.
    Refining margins for jet fuel, which averaged at a discount of $1.15 a barrel
to Dubai crude over April-May, were at 60 cents a barrel over Dubai crude on Wednesday,
Refinitiv data showed.
    Refining margins for 10ppm gasoil dropped to $3.92 per barrel over Dubai
crude, while cash discounts for the grade GO10-SIN-DIF were at 35 cents per barrel to
Singapore quotes on Wednesday.
    - Middle-distillate inventories in the Fujairah Oil Industry Zone rose 2.2% to a record
5.997 million barrels in the week to June 1, data via S&P Global Platts showed.
    - The weekly stocks in Fujairah have averaged 3.7 million barrels so far in 2020, compared
with a weekly average of 2.4 million barrels in 2019, Reuters calculations showed.
    - Meanwhile, U.S. distillate fuel inventories rose by 5.9 million barrels in the week to May
29, compared with expectations for an increase of 2.7 million barrels, data from industry group
the American Petroleum Institute (API) showed on Tuesday.
    - No jet fuel trade, one gasoil deal
    - China's oil demand has recovered to more than 90% of the levels seen before the
coronavirus pandemic struck early this year, a surprisingly robust rebound that could be
mirrored elsewhere in the third quarter as more countries emerge from lockdowns.
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                41.14     0.75       1.86       40.39  GO-SIN
 GO 0.5 Diff                      -2.53    -0.02       0.80       -2.51  GO-SIN-DIF
 Spot Gas Oil 0.25%               42.04     0.75       1.82       41.29  GO25-SIN
 GO 0.25 Diff                     -1.63    -0.02       1.24       -1.61  GO25-SIN-DIF
 Spot Gas Oil 0.05%               42.88     0.87       2.07       42.01  GO005-SIN
 GO 0.05 Diff                     -0.79     0.10     -11.24       -0.89  GO005-SIN-DIF
 Spot Gas Oil 0.001%              44.03     0.89       2.06       43.14  GO10-SIN
 GO 0.001 Diff                     0.35     0.11      45.83        0.24  GO10-SIN-DIF
 Spot Jet/Kero                    39.79     1.00       2.58       38.79  JET-SIN
 Jet/Kero Diff                    -0.25    -0.01       4.17       -0.24  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 Aditya Soni)
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