Asia middle distillates: Key market indicators June 7-11

The Asian middle distillates complex would likely continue to face pressure from tepid demand in the week started June 6 due to a resurgence in COVID-19 cases.

While tighter supply balances provide support for the Asian gasoil market, the rise in COVID-19 infections would keep weighing on the market sentiment. Likewise, the jet fuel/kerosene sector continued to see demand hampered by pandemic-related travel restrictions.

Jet fuel/kerosene

** The balance-month June-July jet fuel/kerosene time spread was pegged at minus 46 cents/b at 0125 GMT June 7, narrowing 6 cents/b from the assessed minus 52 cents/b at the Asian close June 4, S&P Global Platts data showed.

** The FOB Singapore jet fuel/kerosene cash differential plummeted in the week to June 4 on poor air travel demand. The cash differential nearly doubled its losses on the week to be assessed at minus 50 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on June 4, weakening from minus 27 cents/b May 28, Platts data showed.

** India's recent move to extend a suspension of international flight operations until end-June is set to further weigh on jet fuel demand and cap any significant gains in prices of the aviation turbine fuel.

** Singapore reversed to a net exporter of aviation fuels in the week ended June 3, with volumes of 34,467 mt compared with 45,386 mt the previous week, Enterprise Singapore data showed. The bulk of the exports went to Australia at 22,453 mt. Jet fuel/kerosene imports were at 8,149 mt compared with 71,062 mt in the week ended May 26, with most of the imports from Malaysia at 8,127 mt.

** The third quarter-fourth quarter jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus 29 cents/b May 31-June 4, widening 2 cents/b from the previous week's average of minus 27 cents/b.

Gasoil

** The prompt-month June-July gasoil market structure was pegged at plus 5 cents/b at 0125 GMT June 7, narrowing from plus 6 cents/b assessed at the Asian close June 4, Platts data showed.

** The balance-month June Exchange of Futures for Swaps, or EFS, spread was pegged at minus $2.81/mt at 0125 GMT June 7, narrowing from the June 4 assessment at minus $2.99/mt, Platts data showed.

** Expectations of a tightening regional supply balance due to reduced spot availability from China, and lower outflows from key exporters due to scheduled turnarounds and reduced run rates are factors seen pillaring support for the Asian gasoil market, but wobbly regional demand is likely to keep price gains in check.

** The reduced spot availability has also worked to limit inflows into Singapore. Asia's main trading hub saw commercial middle distillate stocks falling 7.9% week on week at 11.47 million barrels May 27-June 2 -- marking its lowest in 15 months -- according to data released late June 3 by Enterprise Singapore. Gasoil inflows into Singapore dropped 54.7% week on week at 65,577 mt.

** The Q3-Q4 gasoil swap spread -- an indication of near-term sentiment -- averaged plus 44 cents/b May 31-June 4, widening 3 cents/b from the previous week's average of plus 41 cents/b.