Asia’s middle distillates markets have shown continued positivity, highlighted by an increase in offers from Chinese refiners for May. Cash differentials are holding steady at three-month highs, currently around 70 cents per barrel, due in part to a lack of lower-priced offers. Buyer interest remains strong, although there have been few transactions on a free-on-board Singapore basis, similar to previous trading sessions.
Refining margins have seen a rebound, reaching nearly a two-week high of $14.4 per barrel. This improvement is attributed to robust market performance and a positive outlook on supply in the near term. However, April exports from India are anticipated to be relatively low, with estimates slightly above 1 million metric tons, as indicated by ship-tracking data from LSEG and Kpler.
In the jet fuel sector, the arbitrage opportunity between Asia and the U.S. West Coast has narrowed significantly over the week, leading to a decrease in inquiries. Spot deals in recent sessions have been reported at discounts ranging from 80 cents to $1 per barrel, with two cargoes sold at these levels. Nonetheless, the Regrade has tightened to 75 cents per barrel, signaling ongoing firmness in front-month jet fuel markets.
On the inventory front, U.S. crude oil stockpiles unexpectedly increased last week due to a rise in imports, while gasoline and distillate inventories experienced a more substantial decline than anticipated. In Singapore, middle distillate stockpiles have dropped to their lowest levels since July 2024 as net diesel and gasoil exports continue to rise. In refinery news, Indian Oil Corp plans to enhance the capacity of its Gujarat refinery to 360,000 barrels per day by mid-2026.
Amidst market uncertainties, investors are preparing for potential quarterly losses from top U.S. refiners. Meanwhile, some OPEC+ members are advocating for accelerated oil output hikes in June amid ongoing compliance disputes over production quotas. Additionally, the Mexican government has taken steps to limit gasoline and diesel vehicle purchases in a bid to combat pollution.