Asia middle distillates - Key market indicators this week

Singapore — Asian middle distillate markets are expected to be steady to slightly firmer in the week starting Nov. 9 from the week before as gasoil inches closer to a more balanced regional outlook, while forecasts of a colder-than-average winter support the jet fuel/kerosene complex.

ICE January Brent crude futures stood at $40.54/b at 0300 GMT Nov. 9, up 1 cent/b from the 0830 GMT Asian close Nov. 6.

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JET FUEL/KEROSENE

** The jet fuel/kerosene market was slightly weaker in mid-morning trade Nov. 9 from the previous session, but sentiment remained firm as heating demand picked up due to lower temperatures in North Asia. Brokers pegged the balance-month November-December jet fuel timespread at minus 24 cents/b at 0300 GMT Nov. 9, widening 5 cents/b from the 0830 GMT Asian close Nov. 6.

** Japan's kerosene output surged 24.6% week on week to 1.62 million barrels over Oct. 25-31, Petroleum Association of Japan data released Nov. 5 showed. Heating demand has picked up as temperatures fall in the lead-up to winter, the country's largest refiner ENEOS said.

** Japan's total refined oil product stocks edged up 1.1% on week to 70.26 million barrels over Oct. 25-31, the PAJ data showed. Middle distillate stocks rose 1.6% over the same period to 38.76 million barrels, led by an increase in jet fuel stocks, which rose 4.1% to 869,415 barrels, the data showed.

** The FOB Singapore jet fuel/kerosene cash differential rose 45 cents/b or 77.59% on week to settle at a discount of 13 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments Nov. 6, Platts data showed.

** The FOB Singapore jet fuel/kerosene crack spread for physical cargoes against front-month cash Dubai was assessed rangebound at plus $1.99/b Nov. 6, dipping 1 cent/b from Oct. 30.

GASOIL

** The prompt balance November-December gasoil market structure stood at minus 34 cents/b at 0300 GMT, narrowing from minus 39 cents/b at the Asian close Nov. 6, Platts data showed.

** The November Exchange of Futures for Swaps spread was pegged at plus 72 cents/mt at 0300 GMT, widening from plus 31 cents/mt at the Nov. 6 Asian close.

** The Asian gasoil market was expected to remain stable this week, with traders saying the two-way cycle of incoming and outgoing barrels has seen the market inching toward a more balanced equilibrium.

** Gasoil inflow to Singapore was being seen from India and the Persian Gulf, attracted by the firm Exchange of Futures for Swaps spread; a positive EFS spread indicates gasoil barrels can command a higher price in Asia than in the West.

** But the inflows have been matched by outflows of gasoil, with newbuild VLCCs, which can carry around 280,000 mt or 2.05 million barrels of gasoil when fully laden, seen moving volumes West, traders said. More newbuild VLCCs are being eyed for delivery into the market, with at least two each on track for November and December, industry participants said.