Asia’s middle distillate markets continue to experience a notable lack of window trading activity, even as timespreads in the paper markets have narrowed. Meanwhile, major refiners are proceeding with April sales.
There are indications that China may soon announce its second batch of fuel export quotas, as oil majors are nearing the limits of their general trade volumes. However, concrete details remain elusive.
Estimates suggest that exports of gasoline, diesel, and jet fuel could reach about 3.4 million metric tons in March. Amidst ongoing spot sales from key refiners in April, some traders remain optimistic that discussion levels for trades could trend upward compared to the previous month.
Refining margins have shown slight improvement, closing around $14.7 a barrel, recovering some losses from earlier sessions. In the open trading window, trading activity has been sparse, with a persistent buy-sell gap.
Cash differentials have been closely aligned with changes in the paper market structure, and the regrade has remained stable, closing at a discount of approximately $1 per barrel. In terms of inventory updates, recent data from the American Petroleum Institute indicates that U.S. crude oil and distillate stocks increased last week, while gasoline inventories experienced a decline.
Additionally, middle distillate stocks at the Fujairah Oil Industry Zone saw a modest rise to 2.356 million barrels for the week ending March 10. On the news front, European buyers are unlikely to reintegrate into Russia’s energy sector should sanctions be lifted, as they have diversified their energy sources.
Kazakhstan, on the other hand, has yet to implement its previously announced oil output and CPC Blend export cuts via the Caspian Pipeline Consortium. Oil prices saw a slight uptick on Wednesday, supported by a weaker dollar, although concerns over a potential U.S. economic slowdown and the effects of tariffs continue to restrain further gains.