Asia’s middle distillates markets have shown robust activity, particularly in trading sessions on Thursday. Refiner sales for June have closely mirrored those of May, while cash differentials have stabilized. Reports indicate an improvement in supply returns from Southeast Asia after previous production setbacks; however, concerns linger regarding supply stability in Northeast Asia. Diesel imports into Singapore are anticipated to reach a three-month high in May, according to Kpler shiptracking data.
Despite this, refining margins have dipped further, now averaging around $14.8 per barrel, amidst ongoing supply concerns. On the trading window, the spot activity for physical cargoes has continued to be positive, extending the momentum seen in recent sessions. Notably, the cash differentials for 10ppm have remained steady at 76 cents per barrel, as a weaker paper market structure countered the effects of higher-priced deals observed onscreen. In the jet fuel market, optimism arose from favorable inventory data released in the U.S.
However, shipping inquiries from Asia to the U.S. West Coast have been limited, resulting in a narrowing of the arbitrage spread between the two regions. Regrade discounts have slightly widened to approximately 65 cents per barrel. In the U.S., crude stocks and distillate inventories decreased last week, with jet fuel demand rising to a five-year high, as reported by the Energy Information Administration (EIA). Conversely, Singapore’s middle distillates inventories have increased for the second consecutive week due to a decline in net exports of diesel, gasoil, and jet fuel.
In other news, Mexico’s Pemex addressed two leaks in a pipeline transporting oil to the Dos Bocas Maritime Terminal. Additionally, Indonesia’s Karimun terminal has escalated imports of Russian oil products, establishing itself as a vital transshipment hub. Lastly, oil prices saw a 1% increase, buoyed by optimism surrounding trade negotiations between the U.S. and China.