Singapore — The front month March/April Singapore gasoil timespread spotted a two- month high on February 8 as an easing in regional supplies has lent support to the market.
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At Asia's close on Friday, the front month March/April gasoil timespread inched up 3 cents/b to minus 24 cents/b, while the prompt Q2/Q3 quarterly spread inched up 3 cents day on day to settle at minus 47 cents/b over the same period, indicating a slight optimism in the gasoil market in the forward months. The last time the Asian gasoil timespread was higher was on November 22 at minus 21 cents/b, S&P Global Platts data showed.
Market sentiment has been firmer as traders were expecting refinery turnarounds and gasoil arbitrage cargoes leaving Asia, to provide further upside to the market.
S&P Global Platts previously reported that gasoil outflows from several regional refineries -- such as those in India -- had declined due to ongoing and impending scheduled turnarounds. Several Indian refiners have scheduled maintenance this year to complete refinery upgrades that will allow them to process Bharat VI fuels, a local variant of the international Euro VI standard. The upgrades are to adhere to India's deadline of April 2020 for the countrywide introduction of Bharat VI fuels at the retail level to combat air pollution.
In addition, more regional supplies of gasoil were heard being cleared out of Asia, with Platts reporting last week that four new-build VLCCs have been fixed to take ultra low sulfur diesel to the western markets from Asia, according to traders. Among others, the 318,000 dwt Dijilah left South Korea in January to load a gasoil cargo in Singapore, while the 319,000 dwt Olympic Laurel is currently off the west coast of Malaysia, having loaded in Japan, according to Platts trade flow analytics software, cFlow.
The firmer sentiment has been borne out with an uptick in trading activity last week, which has shored up the front-month gasoil paper timespread and this support was mirrored in the cargo market, which saw the cash differential for the Asian benchmark ultra-low sulfur gasoil grade lifted to a two-month high of minus 31 cents/b to the Mean of Platts Singapore Gasoil assessments, FOB, at the Asian close on February 4.
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At the Asian close on Friday, February 8, the cash differential for FOB Singapore 10 ppm sulfur gasoil had eased slightly to minus 40 cents/b to MOPS Gasoil assessments.
Meanwhile, the front-month March Singapore gasoil swaps against Brent crude oil swaps -- which measures the relative value of the product to crude oil -- gained 28 cents/b day on day to be assessed at $14.31/b on Friday.
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