Asia middle distillates: Key market indicators this week

Singapore — The Asian middle distillate markets remained pressured by tepid demand for transportation fuels amid the coronavirus pandemic, coupled with waning demand for heating kerosene on rising temperatures.

Sluggish to steady regional demand for jet fuel and gasoil and healthy exports from China remained key factors weighing on the Asian middle distillates complex in the week starting March 22, market participants said.

JET FUEL/KEROSENE

** The front-month April-May jet fuel/kerosene timespread was pegged at minus 38 cents/b at 0230 GMT March 22, narrowing 1 cent/b from minus 39 cents/b at the 0830 GMT Asian close March 19.

** The FOB Singapore jet fuel/kerosene cash differential was assessed at minus 47 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments March 19, falling 7 cents/b week on week.

** Japan's kerosene stocks fell 3.4% week on week to 8.77 million barrels as of March 13, the Petroleum Association of Japan reported on March 17, amid lower production levels on warmer temperatures.

** Enterprise Singapore data showed that Singapore was a net exporter of jet fuel, and exports rose to 56,988 mt in the week over March 11-17. The bulk of the exports were headed for France, Fiji and the US at 45,167 mt, 5,202 mt and 4,526 mt, respectively.

** The Q2-Q3 quarterly jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus 87 cents/b over March 15-19, down from the previous week's average of minus 48 cents/b.

GASOIL

** The April-May gasoil market structure was pegged at minus 14 cents/b at 0230 GMT March 22, narrowing from minus 18 cents/b at the Asian close on March 19, S&P Global Platts data showed.

** The April Exchange of Futures for Swaps spread was pegged at minus $2.50/mt at 0230 GMT March 22, narrowing slightly from an assessed minus $2.80/mt at the March 19 close.

** The weakening in the Asian gasoil market may extend into the week starting March 22, with the market remaining driven by supply-side factors that have heaped bearish sentiment on the complex. The Singapore May/June gasoil timespread flipped into a contango structure at the Asian close on March 16, just a week after the April/May gasoil timespread trended down into discount territory on March 9. Since then the May/June spread has remained firmly in discount, and at 0230 GMT March 22 was at an intraday value of minus 7 cents/b, narrowing slightly from minus 9 cents/b assessed at the Asian close March 19.

** Sources said the downward pressure on the market has been spurred mainly by healthy gasoil exports from China, which have come even as regional demand has been holding steady for months. Traders estimate that gasoil exports from China in March could be as high as 2.6 million mt, while estimates were holding at around 2 million for April exports. Sources said more clarity on China's April gasoil exports can be expected later in the week.

** The Q2-Q3 quarterly gasoil swap spread -- an indication of near-term sentiment -- fell into negative territory in the week and averaged at minus 9 cents/b over March 15-19, down 26 cents/b from the previous week's average of plus 17 cents/b.