Asia middle distillates - Key market indicators this week

Singapore — The Asian middle distillates complex started the week on a stable-to-weak footing as expectations of firmer heating oil demand is poised to lend support to the jet fuel/kerosene market, while the gasoil market remains fundamentally weak with ample supply and tepid demand still characterizing the middle distillate product.

ICE December Brent crude futures slipped 68 cents/b on the day to $42.53/b at 0300 GMT Oct. 12, from $43.21/b at the 0830 GMT Asian close on Oct. 9.

JET FUEL/KEROSENE

**The jet fuel/kerosene complex remained largely stable as market participants stayed on the sidelines, eyeing fresh pricing cues. At 0300 GMT Oct. 12, brokers pegged the prompt balance October-November jet fuel timespread at minus 77 cents/b, which is 1 cent/b wider from minus 76 cents/b at the 0830 GMT Asian close on Oct. 9.

** Industry sources said that while the heightened seasonal demand for heating kerosene has supported the jet fuel/kerosene market, this was offset by lackluster performance in the aviation sector, which saw demand trickle to a drip on the back of the coronavirus pandemic.

** FOB Singapore jet fuel/kerosene cash differential was relatively stable in the week and was assessed at a discount of 50 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Oct. 9, unchanged from the beginning of the week, Platts data showed.

** FOB Singapore jet fuel/kerosene cracking margin against front month cash Dubai remained in positive territory, and was assessed at plus $1.07/b Oct. 9, falling 10 cents/b week on week, Platts data showed.

** S&P Global Platts Analytics reported on Oct. 9 that the Asian jet fuel/kerosene demand is expected to increase from 1.9 million b/d in Q3 to 2.1 million b/d in Q4 due to rising heating demand. In Japan, jet fuel/kerosene demand is set to increase seasonally from 290,000 b/d in Q3 to 425,000 b/d in Q4 due to heating demand, assuming normal winter weather, Platts Analytics added.

GASOIL

** Balance month October-November gasoil market structure was valued at a contango of minus 52 cents/b at 0300 GMT Oct. 12, widening 5 cents/b from the minus 47 cents/b assessment at the close on Oct. 9, Platts data showed.

** The October Exchange of Futures for Swaps spread was pegged at minus $2.40/mt at 0300 GMT Oct. 12, weakening from minus $2.21/mt at the Oct. 9 Asian close.

** While the EFS has been descending deeper into negative terrain, traders said the arbitrage to send Asian gasoil cargoes to the West remains shut, and that the outlook for the market remains challenging as demand for the middle distillate is still fundamentally poor.

** Over in North Asia, industry sources said they expect the marketing program for South Korean spot gasoil cargoes for loading over November to commence this week, but some traders have said the volume to be offered may not be much, given ongoing refinery run cuts, which have resulted in curtailed production.

** Over in India, Mangalore Refinery and Petrochemicals Ltd has offered a 65,000 mt cargo of 10 ppm sulfur high speed diesel for loading from New Mangalore over Nov. 6-8 via a tender that closes Oct. 15, with same-day validity. This is MRPL's second spot cargo offered for November-loading dates. The first was for 65,000 mt of 10 ppm sulfur high speed diesel loading over Nov. 1-3, which was reportedly awarded to a European trader at a premium of around 30 cents/b to the November average of Mean of Platts Arab Gulf 10 ppm sulfur gasoil assessments and Mean of Argus Mideast Gulf 10 ppm sulfur gasoil assessments, FOB.