March 20, 2020 / 11:17 AM / 10 days ago

Asia Distillates-Jet fuel refining margins post record weekly drop

    SINGAPORE, March 20 (Reuters) - Asian jet fuel refining margins posted their biggest weekly
decline in over a decade, as aviation fuel remains among the commodities that have been hit the
hardest by the coronavirus epidemic with more countries shutting borders and airlines grounding
fleets.
    Refining margins, or cracks, for jet fuel slumped over 61% this week, their
steepest weekly decline in at least eleven years.
    The cracks rose to $2.97 per barrel over Dubai crude during Asian trading hours on Friday,
compared with a record low of $1.72 a barrel a day earlier, Refinitiv Eikon data that goes back
as far as March 2009 showed.
    The uncertainties about the how long the virus outbreak may last is weighing on the market
sentiment, trade sources 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, two traders said.
    With airlines activity in jeopardy across the world, oil companies are preparing to take a
rare step of storing jet fuel at sea, even as the product degrades more quickly than other
refined fuels, making it unusable for aviation after a few months.
    Cash discounts for jet fuel JET-SIN-DIF were at $1.10 per barrel to Singapore quotes on
Thursday, the widest since February last year. They were at a discount of 63 cents per barrel on
Thursday.
    Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF were at a discount of 15
cents per barrel to Singapore quotes on Friday, compared with a discount of 16 cents on
Thursday.
    Refining margins for gasoil with 10 ppm sulphur content climbed to $9.87 per
barrel over Dubai crude on Friday, up from $8.82 per barrel a day earlier.
    
    AIRLINES CONTINUE TO SUSPEND FLIGHTS
    - Cathay Pacific Airways Ltd said it would reduce passenger capacity by 96% in
April & May.
    - Airline HK Express, which Cathay Pacific bought last year from Chinese conglomerate HNA
Group, said on Friday it would suspend all flight operations from March 23 until April 30.

    - Latin America's major airlines sharply curtailed international flights on Thursday because
of the coronavirus outbreak as Panama and Colombia imposed month-long travel bans.
    
    ARA STOCKS
    - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and
storage hub STK-GO-ARA dropped 5.6% to 1.8 million tonnes in the week to March 19, data from
Dutch consultancy Insights Global showed.
    - ARA jet fuel inventories STK-JET-ARA were up 16.7% at 461,000 tonnes, the data showed.
    - Compared with a year earlier, jet fuel stocks were 33.4% lower, while gasoil inventories
dropped 28.7%.

    SINGAPORE CASH DEALS
    - Three gasoil trades, two jet fuel deals
    - For more information, click
    
    OTHER NEWS
    - China's refined oil consumption is expected to recover in March from a month earlier, as
companies resume operations and travel curbs are removed, but demand is likely to be down 19.1%
on the year, for the steepest contraction since at least 2004.
    - Oil prices rose on Friday as the world's richest nations poured unprecedented aid into the
global economy to stop a coronavirus-driven recession and U.S. President Donald Trump hinted he
may intervene in the price war between Saudi Arabia and Russia.

    ASSESSMENTS
 MID-DISTILLATES                                                                       
 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               39.77     4.90      14.05       34.87  GO-SIN
 GO 0.5 Diff                     -1.96     0.08      -3.92       -2.04  GO-SIN-DIF
 Spot Gas Oil 0.25%              40.01     4.90      13.96       35.11  GO25-SIN
 GO 0.25 Diff                    -1.72     0.08      -4.44       -1.80  GO25-SIN-DIF
 Spot Gas Oil 0.05%              40.70     4.90      13.69       35.80  GO005-SIN
 GO 0.05 Diff                    -1.03     0.08      -7.21       -1.11  GO005-SIN-DIF
 Spot Gas Oil 0.001%             41.57     4.82      13.12       36.75  GO10-SIN
 GO 0.001 Diff                   -0.15     0.01      -6.25       -0.16  GO10-SIN-DIF
 Spot Jet/Kero                   33.58     4.56      15.71       29.02  JET-SIN
 Jet/Kero Diff                   -1.10    -0.47      74.60       -0.63  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 Vinay Dwivedi)
  
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