Asia Distillates-Jet fuel cash differentials weaken on lacklustre demand

Cash differentials for jet fuel were at a discount of 4 cents per barrel to Singapore quote

  

SINGAPORE- Asia's jet fuel cash differentials flipped back to a narrow premium on Tuesday amid muted buying interests in the physical market, while near-term outlook for the aviation fuel remained clouded as airlines continued to trim capacity for the remainder of the year.

Cash differentials for jet fuel were at a discount of 4 cents per barrel to Singapore quotes, compared with a premium of 5 cents per barrel a day earlier.

Airlines across the world reduced their scheduled capacity for October to December by 11.8 million seats this week, while September capacity was 2% below the levels in August, according to aviation data firm OAG.

Although scheduled airline seat capacity in China rose by around 544,000 seats or 3.6% in the week to Monday, bumping up the overall capacity globally, flight capacity in Japan and South Korea dropped 8.6% and 8.1%, respectively, OAG data showed.

Refining margins or cracks for jet fuel dipped to $9.26 per barrel over Dubai crude during Asian trading hours on Tuesday, down from a multi-month peak of $9.81 per barrel hit in the previous session.

The jet fuel cracks, which have gained 33% in the last two weeks, are buoyed by expectations for upcoming heating demand for kerosene ahead of winter months in Japan and Korea, market watchers said.

CARBON-OFFSET CRUDE TRADE

- More producers and refiners are looking at ways to offset carbon emissions of their crude oil exports to meet future global demand for low-carbon raw materials, although such trades will require time to develop as it remains unclear which parties will bear the decarbonisation costs, industry executives said. 

- Producers from the United States to Europe and Australia have sold so-called 100% carbon-neutral crude and condensate using carbon credit offsets earlier this year in preparation for carbon costs to be introduced for the fossil fuel. These costs cover greenhouse gas emitted from the oil's production process to its transportation to end users.

TENDERS MDIS/TENDA

- Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking 300,000 barrels of jet fuel for Nov. 22-23 delivery into Colombo. The tender closes on Oct. 5 and will remain valid for three days.

SINGAPORE CASH DEALS

- No jet fuel deals, no 10 ppm gasoil trades

OTHER NEWS

- A lack of investment in new oil and gas supplies, amid a shift in focus to cleaner fuels, is likely to drive price volatility in the next decade as demand for traditional energy sources grows, senior industry executives said. 

- Oil markets climbed for a sixth day on Tuesday, reversing earlier losses, on fears over tight supply while surging prices of liquefied natural gas (LNG) and coal also lent support.

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


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