Asia middle distillates - Key indicators this week

Singapore — The Asian middle distillates markets kicked off the week on steady to weaker ground as industry participants digested news of another month-long extension to the lockdown in Malaysia to June 9, while monitoring for further developments from around the region.

While production cuts and a scheduled regional refinery turnaround, coupled with a gradual relaxation of containment measures, will help to reinstate some requirements, both gasoil and jet fuel markets were struggling with stock builds amid still-depressed demand, market sources said.

July ICE Brent crude futures slipped 32 cents/b from last Friday's close to $30.65/b at 0300 GMT Monday.

JET FUEL/KEROSENE

** The prompt balance May/June Singapore jet fuel timespread opened Monday on a weaker note at minus $3.50/b, down 11 cents/b from last Friday's Asian close.

** Chronic oversupply of aviation fuel was continuing to exert downward pressure in the aviation market. Singapore's middle distillate stocks remained above the 14 million barrel mark in the week ended May 7, up 12.75% month on month, latest Enterprise Singapore data showed.

** Market sentiment in Asia remained bearish as most international flights remained grounded in a bid to curb the coronavirus pandemic. Singapore Airlines in late April extended flight cancellations to 96% of its passenger capacity until June.

** The Q3/Q4 quarterly jet fuel/kerosene spread - an indication of near term sentiment - narrowed to minus $4.35/b at the Asian close Friday from 46 cents/b from last Monday, as the market monitored the gradual easing of lockdown measures in multiple countries for signs of when flights will resume.

GASOIL

** The Singapore balance May/June gasoil timespread opened Monday at minus $1.36/b, steady from Friday's close.

** The front-month May Exchange of Futures for Swaps spread was pegged at plus $7.31/mt at 0300 GMT, down $1.10/mt from Friday's Asian close.

** The Asian gasoil market is expected to remain steady this week, with fundamentals balanced between tightening supply and emerging pockets of demand.

** However traders said the demand situation remains fragile amid a still well-supplied market.

** The changing balance in the regional demand-supply fundamentals reflects a gradual easing in containment measures across countries where the number of confirmed local cases has fallen.

** Japan may end its state of emergency this week in regions with stable COVID-19 cases, while India will gradually restart its train system from Tuesday.

** Malaysia however, has extended its Movement Control Order until June 9, its fourth extension since the lockdown was imposed on March 18.