Asia middle distillates: Key market indicators this week

Singapore — The Asian middle distillates complex started the week of April 26-30 on likelihood of firmer market sentiment. Gasoil demand is expected to be supported by cautious optimism as Europe reopens, while the jet fuel/kerosene sector gathers pace on firmer market fundamentals in the region.

JET FUEL/KEROSENE

**The front-month May-June jet fuel/kerosene timespread was relatively steady and pegged at minus 10 cents/b at 0200 GMT April 26, widening 1 cent/b from minus 9 cents/b at the 0830 GMT Asian close on April 23, Platts data showed.

**The FOB Singapore jet fuel/kerosene cash differential extended further gains and rose to an 11-week high of minus 3 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments on April 23, marking a 63-cent/b jump since the beginning of April. The cash differential was last seen higher on Feb. 10 at MOPS minus 1 cent/b, Platts data showed. According to industry sources, the jump in jet fuel prices was attributed to firmer demand and shorter supply of aviation fuels in the region.

**Japan's oil product exports rebounded 55.1% week on week to 1.9 million barrels over April 11-17, of which, jet fuel exports jumped 30.4% on the week to 467,762 barrels, the latest data by the Petroleum Association of Japan showed.

**Singapore remained a net exporter of aviation fuels and kerosene in the week ended April 21. Exports were highest to the UAE at 39,266 mt, followed by Australia and Myanmar at 32,602 mt and 13,318 mt, respectively.

** The Q3-Q4 jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus 34 cents/b April 19-23, narrowing 10 cents/b from the previous week's average of minus 44 cents/b.

GASOIL

**Front-month May-June gasoil market structure was pegged at minus 15 cents/b at 0200 GMT April 26, widening by just a cent from the minus 14 cents/b assessed at the Asian close on April 23, Platts data showed.

**The May Exchange of Futures for Swaps, or EFS, spread was pegged at minus $4.08/mt at 0200 GMT April 26, widening from the April 23 assessment of minus $3.30/mt, Platts data showed.

**Some respite for the Asian gasoil market is expected in the week ahead as optimism over the reopening of Europe could help bolster support to the middle distillate complex, traders said. The possibility of Asian gasoil barrels moving to the West would provide an uplift to the market, a welcome departure from the bearish market sentiment over the past two weeks amid heavy supplies and low demand, market sources said.

**Some industry sources remain wary of overall regional demand, which has been showing worrying signs of weakness, following a surge in coronavirus infections resulting in some countries implementing localized lockdowns and fresh restrictions. Japan enacted its third state of emergency -- which started April 25 and will last till May 11 -- for four prefectures, and India's deepening COVID-19 crisis shows little signs of abating.

** The Q3-Q4 gasoil swap spread -- an indication of near-term sentiment -- averaged plus 13 cents/b April 19-23, widening 5 cents/b from the previous week's average of 3 cents.