Monday

31-03-2025 Vol 19

Asia Distillates: Positive Activity in the Window; East-West Spread Remains Tight

The Asia middle distillates market is showing positive activity as trading windows remain open, with ongoing discussions about spot sales for April. Despite a rise in ICE gasoil futures, the east-west price spread continues to be narrow. The 2% increase in gasoil futures follows concerns regarding possible escalations in conflict in the Middle East, which could disrupt trade routes via the Suez Canal. Nevertheless, there are ongoing worries about the availability of swing diesel supplies, which could weigh down the market.

It is anticipated that at least two to three cargoes will be directed to the Asia-Pacific region with end-March loading schedules. Northeast Asian refiners have made initial private offers for April, although concrete details are still unverified. In terms of jet fuel, regional buyer Pertamina has shown demand for early April cargoes, reacting to offers from Indian refiners. As of Monday’s market close, the refining margins for 10ppm sulphur gasoil have stabilized at approximately $13.6 per barrel.

Cash differentials experienced a rise of 8 cents, reaching premiums of 26 cents per barrel, influenced by higher-priced deals and a broader backwardated timespread for the April and May paper markets. The regrade for gasoil has widened to a discount of around $1.2 per barrel, indicating the strength of gasoil paper markets compared to jet fuel. In recent news, China’s crude oil throughput has seen a 2.1% increase in January and February, attributed to a newly operational refinery and increased travel during the holidays, yet weak refining margins continue to pose challenges. Industry analysts have noted that Asia’s capacity to supply sustainable aviation fuel is anticipated to outstrip regional demand, leading to a rise in exports and potential price reductions for this fuel.

Moreover, China’s retail sales growth has accelerated, signaling some positive trends amidst economic pressures. Oil prices also rose following U.S. commitments to intensify interventions against Yemen’s Houthi forces.

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