Asia middle distillates - Key market indicators this week

Singapore — The Asian middle distillates market was at an even keel at the start of the week of Dec. 14, as sentiment in the gasoil complex stable on tight regional supply amid some buying interest, while the jet fuel/kerosene complex remained steady on conflicting indicators, and as buyers stayed on the sidelines, awaiting fresh pricing cues.

Front month February ICE Brent crude futures fell 39 cents/b to $50.10/b at 0300 GMT Dec. 14 from the 0830 GMT Asian close on Dec. 11.

JET FUEL/KEROSENE

** The jet fuel/kerosene market was steady mid-morning Dec. 14 from the previous session amid mixed indicators. Brokers pegged the balance month December-January jet fuel timespread at minus 40 cents/b at 0300 GMT, unchanged from the 0830 GMT Asian close on Dec 11.

** FOB Singapore jet fuel/kerosene is witnessing an uptick in fundamentals after the Japan Meteorological Agency forecasted colder temperatures across Northern Japan over Dec. 12-Jan. 11, and industry sources expect kerosene demand for heating to increase following the forecast.

**Air travel demand remains battered due to COVID-19.

** The FOB Singapore jet fuel/kerosene cash differential flipped into discounts and was assessed at minus 25 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Dec. 11, falling 32 cents/b week on week. The cash differential had flipped into premium territory on Dec. 4 and Dec. 7 at MOPS plus 7 cents and MOPS plus 2 cents/b, respectively, Platts data showed.

** The Q1/Q2 jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus 82 cents/b for the week ended Dec. 11, up from the prior week's average of minus $1.12/b.

GASOIL

** The balance December-January gasoil market structure stood at minus 4 cents/b at 0300 GMT, narrowing from minus 9 cents/b at the Asian close Dec. 11, Platts data showed.

** The January Exchange of Futures for Swaps spread was pegged at plus 75 cents/mt at 0300 GMT, narrowing from plus 89 cents/mt at the Dec. 11 close.

** The Asian gasoil market remains volatile, with the market structure moving from backwardation to contango over the week of Dec. 7-11, but there may be some semblance of balance in the week ahead, traders said. Latest Enterprise Singapore data released late Dec. 10 showed that gasoil outflows from Singapore were nearly seven times higher than that of inflows, reflecting still tight regional supplies due to an extended period of refinery run cuts even as some pockets of demand remain.

** Reflecting the improved sentiment, the Q1-Q2 quarterly gasoil swap spread -- an indication of near-term sentiment -- averaged minus 47 cents/b for the week ended Dec. 11, up from the prior week average of minus 78 cents/b.

** Gasoil demand continues to move at an uneven pace due to COVID-19 developments. Over the weekend, South Korea reported a record jump in the number of confirmed cases over a 24-hour period, with the government issuing a warning that it may have to impose tighter restrictions to combat the spread. On Dec. 14, local media reported that South Korean schools have been ordered to close from Dec. 15, with the closures seen as a possible roll out of the country's third phase of social distancing measures, which would essentially mean a lockdown.