Asia middle distillates: Key market indicators for Feb. 28-March 4

Supply concerns as escalating geopolitical tensions between Russia and the West increase the risk of sanctions against Russian oil product exports and steady regional demand are expected to boost the Asian middle distillates for the Feb. 28-March 4 trading week.

At 10:00 am Singapore time (0200 GMT), the front-month April ICE Brent crude oil futures contract was at $102.38/b, up 79 cents/b (0.78%) from the Feb. 25 Asian close of $101.59/b.

Jet fuel/Kerosene

** Market sources said the coming week will likely see support for the Asian jet fuel/kerosene complex being maintained, as many countries around the region were embracing freer travel amid rising vaccination rates, while tight regional supply continues to bolster sentiment amid an open arbitrage to move cargoes west. Upcoming turnarounds in Northeast Asia are expected to exacerbate current tight supply, with ongoing geopolitical tensions lending further support.

** Brokers pegged front month March-April jet fuel/kerosene time spread at plus $1.95/b at 0200 GMT Feb. 28, widening 45 cents/b from plus $1.50/b at the 0830 GMT Asian close Feb. 25, Platts data showed.

** The FOB Singapore jet fuel/kerosene cash differential was assessed at plus $1.33/b to the Mean of Platts Singapore jet fuel/kerosene assessments at the Feb. 25 close, up 10 cents week on week, Platts data showed.

** Japan's kerosene stocks were down 9.9% week on week to 8.09 million barrels Feb. 19, according to the Petroleum Association of Japan data released Feb. 23, due to robust consumer demand for winter heating fuels. Japan's kerosene demand is estimated to have risen 13% year on year in February as a result of experiencing colder-than-a-year-ago weather during the month, PAJ President Tsutomu Sugimori said Feb. 17.

** The Q2-Q3 jet fuel/kerosene swap spread averaged plus $3.08/b over Feb. 21-25, up from plus $3.06/b the week before.

Gasoil

** Supply jitters surrounding Russian exports are expected to keep the Asian gasoil market on edge, with traders wary of any imposition of sanctions against Russian oil product exports. This could increase East-West arbitrage flows and tighten the gasoil market in Asia further.

** Brokers pegged front-month March-April Singapore gasoil at plus $2.65/b at 0200 GMT Feb. 28, widening 30 cents/b from plus $2.35/b at the 0830 GMT Asian close Feb. 25.

** The March EFS spread was pegged at minus $33/mt at 0200 GMT Feb. 28, narrowing 91 cents/mt from minus $33.91/mt at the Feb. 25 close.

** Singapore's commercial middle distillate stockpiles fell 1.42% week on week to 7.36 million barrels on Feb. 23 to reach a six-week low, Enterprise Singapore data released late Feb. 24 showed. The depletion of inventories was facilitated by a net export position for gasoil cargoes over the week ended Feb. 23, amid a steeply backwardated market structure that discourages the storage of surplus gasoil barrels.

** The Q2-Q3 gasoil swap spread averaged plus $4.20/b Feb. 21-25, widening from plus $3.95/b the week before.