Asia’s middle distillates markets have faced a dry spell, with no physical cargo deals occurring in the trading window for four consecutive sessions. Refiners have been compelled to offer April spot cargoes at discounted rates.
A significant Chinese refiner sold some prompt jet fuel scheduled for end-March shipment at discounts exceeding $1 per barrel. Traders anticipate additional offers from refiners in the upcoming week, as the market sentiment seems to favor lower pricing.
Jet fuel has found support due to a favorable east-west arbitrage towards the U.S. West Coast, attributed to lower refinery utilization rates in that region. There has been notable buying interest from importers for both March and April cargoes, as confirmed by a trade source.
Additional opportunities for Middle East and India-sourced jet fuel to the U.S. West Coast further emphasize this trend. On the diesel front, the east-west price spread has surged to its highest discounts since early March, largely influenced by a decline in commercial stockpiles in the Amsterdam-Rotterdam-Antwerp (ARA) markets and anticipated lower imports in April.
However, spot refiner sales have predominantly been executed at discounts of nearly $1 a barrel, indicative of a more cautious buying atmosphere compared to previous weeks. Refining margins have remained relatively stable, closing the week at $13.5 a barrel.
Despite these figures, the trading window has struggled with a buy-sell gap, resulting in limited bids for the fourth straight session. Cash differentials for 10ppm dipped to a one-month low of 16 cents per barrel, reflecting ongoing low-priced offers.
In other developments, gasoil stocks in the ARA hub decreased by over 4% for the week, marking their lowest levels since mid-December. Additionally, Phillips 66’s Wood River refinery is undergoing a turnaround, according to IIR Energy.
In terms of global news, OPEC+ is planning further oil output cuts, and the U.S. has introduced new Iran-related sanctions, impacting several entities including an independent refinery in China. As a result, oil prices rose, signaling a second consecutive weekly gain driven by expectations of tighter supply.