Asia Distillates-Gasoil cash premiums soar to highest in 15 months

Asia's cash premiums for 10 ppm gasoil surged to their highest level in more than a year on Tuesday

  

SINGAPORE- Asia's cash premiums for 10 ppm gasoil surged to their highest level in more than a year on Tuesday, riding on firmer buying interests for physical cargoes, while refining margins for the industrial fuel grade lingered close to their strongest levels since January 2020.

Cash premiums for gasoil with 10 ppm sulphur content GO10-SIN-DIF jumped 11 cents on Tuesday to 64 cents per barrel to Singapore quotes, a level not seen since July last year.

Refining margins, also known as cracks, for 10 ppm gasoil were at $14.95 per barrel over Dubai crude during Asian trading hours, compared with $15.40 per barrel a day earlier.

Cracks for the benchmark gasoil grade in Singapore, which hit a high of $15.64 per barrel last week, have climbed about 78% in the last two months, in turn driving the overall margins for Asian oil refiners to pre-pandemic levels. 

"The recovery in Asian gasoil demand coincided with lower exports from China and autumn refinery maintenance, helping to rebalance the regional market... that said, we believe the recent jump in cracks is partly sentiment/risk driven," energy consultancy FGE said in a note.

"The surplus in Asian gasoil will widen over the next few months to near 500,000 barrels per day by early 2022 (estimated at 280,000 bpd in October)," FGE added.

The front-month time spread for 10 ppm gasoil, which have widened its backwardation by over 80% in the last two weeks, traded at $1.08 per barrel on Tuesday, Refinitiv Eikon data showed.

POWER SHORTAGES

- China's power shortages hit growth in the world's second biggest economy, threatening more pain for global supply chains, while Europe's gas squeeze looked set to continue as Russia's Gazprom showed no sign of hiking exports to the region in October. 

- Coal, oil and gas prices have all rocketed higher in recent weeks hammering utilities and consumers from Beijing to Brussels, raising inflationary pressures and putting at risk a global recovery from the COVID-19 pandemic.

SINGAPORE CASH DEALS

- Five gasoil deals, no jet fuel trades

OTHER NEWS

- Oil prices rose on Tuesday as a supply crunch in natural gas, electricity and coal continued across the globe while falling temperatures in China revived concerns 

(Reporting by Koustav Samanta; Editing by Shailesh Kuber) ((koustav.samanta@thomsonreuters.com ( +65 6870 3503)(Reuters Messaging: koustav.samanta.thomsonreuters.com@reuters.net))


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