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Asia Distillates-Jet refining margins hit highest in almost four years

CommoditiesNov 08, 2018 16:20
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Asia Distillates-Jet refining margins hit highest in almost four years

SINGAPORE, Nov 8 (Reuters) - Asian refining margins for jet fuel hit their highest levels in about four years on Thursday, helped by recent weakness in crude oil prices, while traders anticipate firmer demand during the upcoming winter months.

Demand for kerosene, which is used for heating in some parts of the region, would start picking up as temperatures drop going into the peak winter season, broker sources said. Kerosene is closely related to jet fuel with jet margins determining the profitability of both middle distillates.

Refining margins, also known as cracks, for jet fuel JETSGCKMc1 rose to $19.41 a barrel over Dubai crude during Asian trade on Thursday, the highest since December 2014. The margins were at $18.31 on Wednesday.

Cash differentials for the aviation fuel JET-SIN-DIF narrowed their discounts to 33 cents a barrel to Singapore quotes on Thursday, compared with a 37-cent discount a day earlier.

"Now, it's already November... But the current temperature levels are still not very supportive (to the cash market). But overall aviation demand is not too bad actually," a Singapore-based trader said.

A booming aviation market with expanded airports and newer routes have persistently supported the jet fuel market in the region.

Asia Pacific airlines' passenger demand rose 5.4 percent in September from a year earlier, the International Air Transport Association (IATA) said on Tuesday. That was down from 7.4 percent annual growth in August, partly due to the impact of a typhoon that led to a multi-day closure of Kansai International Airport in Japan, IATA said.

Traders said the seasonal strength in jet fuel in the fourth and first quarters mainly depends on winter demand, which has not picked up as of yet but is expected to strengthen in the coming days.

Meanwhile, refining cracks for 10ppm gasoil GO10SGCKMc1 also rose to a near four-year peak on Thursday at $18.72 a barrel over Dubai crude, up from $17.63 a barrel on Wednesday.

Cash premiums for gasoil with 10ppm sulphur content GO10-SIN-DIF fell to an over two-month low on Thursday after middle distillate inventories in Singapore rose to a five-week high. benchmark gasoil cash premiums were at 35 cents a barrel to Singapore quotes, compared with a premium of 53 cents a barrel in the previous session.

SINGAPORE INVENTORIES

- Singapore onshore middle-distillate stocks rose by about 7 percent to 10.2 million barrels in the week to Nov. 7, International Enterprise (IE) data showed. O/SING1

- Since the start of the year Singapore middle-distillate inventories have averaged 9.4 million barrels a week, compared with a weekly average of about 12 million barrels in 2017, Reuters calculations show.

- Overall, onshore middle-distillate inventories were about 12 percent lower than a year ago.

EIA INVENTORIES

- U.S. crude inventories rose last week, boosted by another jump in production to a new record, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday. U.S. crude inventories USOILC=ECI rose by 5.8 million barrels in the week to Nov. 2, more than double analysts' expectations for an increase of 2.4 million barrels. EIA/S

- Distillate stockpiles USOILD=ECI , which include diesel and heating oil, fell by 3.5 million barrels, versus expectations for a 2.6 million-barrel drop, the EIA data showed.

SINGAPORE CASH DEALS

- No gasoil deals, no jet fuel trade.

- For more information, please click O/AS

OTHER NEWS

- China's crude oil imports rose to all-time high on a daily basis in October, supported by record demand from private refiners and healthy margins, customs data showed Thursday. Oil prices rose on Thursday after record Chinese crude imports eased concerns that a slowdown in the world's No.2 economy could stoke an emerging fuel glut.

However, oil markets were held back somewhat after the United States became the world's top crude producer as its output hit record levels. O/R

- A return to oil production cuts by OPEC and its allies next year cannot be ruled out, two OPEC sources said on Wednesday, to avert a possible supply glut that could weigh on prices. Japan's Toshiba Corp 6502.T will exit its U.S. liquefied natural gas (LNG) business by paying China's ENN Ecological Holdings Co 600803.SS more than $800 million to take over the unit as part of a plan to shed money-losing assets. MID-DISTILLATES

CASH ($/T)

ASIA CLOSE

Change

% Change

Prev Close RIC Spot Gas Oil 0.5%

87.38

1.36

1.58

86.02 GO-SIN GO 0.5 Diff

-2.10

-0.05

2.44

-2.05 GO-SIN-DIF Spot Gas Oil 0.25%

88.43

1.28

1.47

87.15 GO25-SIN GO 0.25 Diff

-1.05

-0.13

14.13

-0.92 GO25-SIN-DIF Spot Gas Oil 0.05%

89.00

1.28

1.46

87.72 GO005-SIN GO 0.05 Diff

-0.48

-0.13

37.14

-0.35 GO005-SIN-DIF Spot Gas Oil 0.001%

89.83

1.23

1.39

88.60 GO10-SIN GO 0.001 Diff

0.35

-0.18

-33.96

0.53 GO10-SIN-DIF Spot Jet/Kero

89.62

1.63

1.85

87.99 JET-SIN Jet/Kero Diff

-0.33

0.04

-10.81

-0.37 JET-SIN-DIF

For a list of derivatives prices, including margins, please

double click the RICs below.

Brent M1

BRENTSGMc1

Gasoil M1

GOSGSWMc1

Gasoil M1/M2

GOSGSPDMc1

Gasoil M2

GOSGSWMc2

Regrade M1

JETREGSGMc1

Regrade M2

JETREGSGMc2

Jet M1

JETSGSWMc1

Jet M1/M2

JETSGSPDMc1

Jet M2

JETSGSWMc2

Gasoil 500ppm-Dubai

GOSGCKMc1

Cracks M1

Gasoil 500ppm-Dubai

GOSGCKMc2

Cracks M2

Jet Cracks M1

JETSGCKMc1

Jet Cracks M2

JETSGCKMc2

East-West M1

LGOAEFSMc1

East-West M2

LGOAEFSMc2

LGO M1

LGOAMc1

LGO M1/M2

LGOASPDMc1

LGO M2

LGOAMc2

Crack LGO-Brent M1

LGOACKMc1

Crack LGO-Brent M2

LGOACKMc2

Asia Distillates-Jet refining margins hit highest in almost four years
 

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