Asia’s middle distillates market wrapped up the week with active trading in the window. However, refiners have set April spot sale levels slightly lower, indicating a cautious sentiment among traders.
Discussions centered around cargoes from key northeast Asian refiners, but prices were lower compared to the previous week, suggesting a shift in market dynamics. A bearish trend was noted as the east-west price spreads tightened for the second consecutive week, implying that swing supplies might start moving toward east Asia instead of the west.
The front-month east-west spread reached nearly two-month lows, lingering between $22-23 per metric ton during these trading sessions. Presently, only a few barrels from India are expected to be sent to southeast or northeast Asia by the end of March.
Refining margins remained weak, averaging around $13.70 a barrel, still close to three-month lows. Additionally, cash differentials fell to 18 cents per barrel, mirroring the overall weakness in physical markets and a shrinking time spread between March and April paper levels.
Jet fuel activity remained muted, with limited trading due to a widening buy-sell gap, resulting in a regrade of about $1 a barrel on Friday. Regarding inventory levels, gasoil stocks dropped by 4% for the week, totaling 2.27 million tons.
Refinery news included a fire at a gasoline tank at Russia’s Tuapse oil complex due to a Ukrainian attack, although no injuries were reported. Moreover, Nigeria’s Dangote oil refinery is scheduled to shut its gasoline-making unit for maintenance starting June 1.
On the global news front, oil prices rebounded slightly, recovering some losses from the previous session. Chinese state oil companies are now cautious about importing Russian oil due to fluctuating market conditions, while the U.S. imposed sanctions targeting Iran’s oil sector, which may further ripple through the global oil markets.