Asia middle distillates – Key market indicators this week

Singapore — Asia's middle distillate complex started the week by falling further in mid-morning trade Monday as the demand outlook remained dim under persisting pressure from the coronavirus pandemic, and as May ICE Brent crude futures fell $2.51/b from Friday's Asian close at 4:30 pm Singapore time (0830 GMT) to stand at $23.28/b at 11 am (0300 GMT).

JET FUEL/KEROSENE

* The Singapore jet fuel front month April/May timespread opened Monday at a 11.5-year low of minus $2.80/b as the coronavirus pandemic decimated jet fuel demand. The spread was last assessed at this level on September 30, 2008, Platts data showed.

* Further down the curve, the Q2/Q3 quarterly spread remained in negative territory at minus $5.68/b, indicating the near-term outlook was bearish.

* India's 21-day lockdown has slashed the country's jet fuel demand, sources said.

* The FOB Korea jet fuel/kerosene cash differential has sunk to a near 12-year low on demand destruction. It was assessed at a discount of $2/b to the Mean of Platts Singapore jet fuel/kerosene assessment Friday, down 60 cents/b week on week, Platts data showed. The lack of outlets for jet fuel means refineries will maximize gasoil production while minimizing jet fuel output going forward, market sources said.

* More global airlines are calling for government assistance amid the decline in air traffic. Local flagship carrier Singapore Airlines will receive a $13 billion lifeline from city-state investor Temasek Holdings.

GASOIL

* The Singapore April/May gasoil timespread opened Monday at minus 82 cents/b, up 3 cents/b from Friday's close at minus 85 cents/b.

* The front-month April Exchange of Futures for Swaps spread was pegged at minus $13.25/mt at 0300 GMT, down from minus $12.40/mt at the 0830 GMT Asian close Friday.

* Despite the widening of the EFS, the arbitrage to move Asian gasoil to the West remained closed. "There's still a long way to go," a trader in Singapore said, adding high freight rates were hampering economics.

* Asian gasoil demand was expected to contract further this week amid increasingly stringent containment measures being enforced around the world to curb the spread of COVID-19

* The drop in regional demand was expected to spur higher exports as sellers look overseas to find buyers for their surplus volumes, increasing spot availability even as demand dwindles.

* Spot gasoil offers from India are rising, with the volume offered for April already totaling 385,000 mt and likely to increase. This compares with 201,000 mt offered for March, according to Platts' observations.

* India's Nayara Energy issued two spot gasoil tenders over the weekend, offering two 65,000-70,000 mt gasoil cargoes for loading from Vadinar over April 19-23 and April 26-30 that close March 30 with same-day validity.