Asia middle distillates: Key market indicators for July 12-16

Asian middle distillate markets are entering the July 12-16 trading week on a steady note, with a persistently mixed outlook amid thin trading activity in the gasoil sector, while ongoing travel restrictions continue to dampen sentiment in the jet fuel/kerosene sector.

At 10:00 am Singapore time (0200 GMT), the ICE August Brent crude futures contract was down 7 cents/b (0.09%) at $75.48/b, from $75.55/b at the July 9 Asian close.

Jet fuel/kerosene

** Balance month July-August jet fuel/kerosene time spread was pegged at minus 36 cents/b at 0200 GMT July 12, widening 12 cents/b from the Asian close on July 9, Platts data showed.

** The FOB Singapore jet fuel/kerosene cash differential ended the week at minus 38 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments on July 9, narrowing 9 cents/b week on week. The cash differential was last seen higher on June 22 at MOPS minus 35 cents/b, Platts data showed.

** The FOB Korea jet fuel/cash differential rebounded from a nine-month low with industry sources pointing to an uptick in demand amid an open arbitrage to the US.

** Southeast Asia's aviation sector continues to brace against tough headwinds as persistent lockdowns and COVID-19 infections in the region hinder domestic travel plans and pushes back timelines for resumption of international air travel.

** The Q4 2021-Q1 2022 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged plus 38 cents/b over July 5-9 from an average of minus 13 cents/b the week before.

Gasoil

** The balance July-August gasoil market structure was pegged at parity at 0200 GMT July 12, down from plus 5 cents/b assessed at the 0830 GMT Asian close on July 9, Platts data showed.

** The July Exchange of Futures for Swaps, or EFS, spread was pegged at minus $5.21/mt at 0200 GMT July 12, widening from minus $4.07/mt at the July 9 Asian close, Platts data showed.

** The week ahead may see the Asian gasoil market rangebound, industry participants said, noting that divided opinion and thin trade may result in choppy activity. This has been reflected in divergent moves in the complex, with the cash differential for FOB Singapore 10 ppm sulfur gasoil cargoes trending deeper into discount even as the prompt and front month gasoil intermonth spreads hover in backwardation. At the Asian close on July 9, the Singapore 10 ppm sulfur gasoil cash differential was assessed at minus 13 cents/b to the Mean of Platts Singapore gasoil assessments, down 2 cents/b on the day.

** The latest Enterprise Singapore data released July 7 held some respite for the market. It showed that middle distillate stockpiles veered away from a seven-week high to drop to a four-week low over July 1-7. According to the government agency, inventories stood at 11.59 million barrels for the week ended July 7, down 15.92% on the week. The decline in stockpiles was led by gasoil, with inflows plummeting over 80% on the week to 53,753 mt, while exports fell by a much smaller 22% week on week to 305,116 mt.

** The Q4 2021-Q1 2022 gasoil swap spread, an indication of near-term sentiment, averaged plus 92 cents/b over July 5-9, widening 30 cents/b from the 62 cents/b average the week before.