Asia Distillates-Jet fuel cash discounts narrow, cracks top $8/bbl

Asia's cash discounts for jet fuel narrowed on Wednesday

  

SINGAPORE- Asia's cash discounts for jet fuel narrowed on Wednesday amid active buying interests for physical cargoes, while traders were hopeful the market would gather strength in the coming months as winter heating demand for kerosene picks up ahead of winter.

Cash discounts for jet fuel were at 1 cent per barrel to Singapore quotes, compared with a discount of 6 cents per barrel a day earlier.

Refining margins for jet fuel, which also determine the profitability of closely-related kerosene, jumped to $8.27 per barrel over Dubai crude during Asian trading hours, the strongest since March 2020. The cracks were at $7.91 per barrel on Tuesday.

"Kerosene demand for heating in Japan and South Korea typically increases by 0.25 million barrels per day (bpd) quarter-on-quarter in the fourth quarter, which should boost Asian demand when combined with the recovery in flight numbers from August lows," Energy Aspects said in a note.

Outside of China, however, "Asian air traffic will be slow to pick up, with international flying unlikely to start in earnest until well into 2022," the consultancy added.

The Oct/Nov time spread for the aviation fuel in Singapore, which flipped into a backwardation last week, traded at 7 cents per barrel on Wednesday.

INVENTORIES

- Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 21.8% to a six-week low of 3.1 million barrels in the week ended Sept. 20, data via S&P Global Platts showed.

- The weekly stocks in Fujairah have averaged 3.8 million barrels this year, compared with 4.2 million barrels in 2020, Reuters calculations showed.

- U.S. distillate fuel inventories, which include diesel and heating oil, fell by 2.7 million barrels in the week to Sept. 17, according to market sources, citing American Petroleum Institute figures.

SINGAPORE CASH DEALS

- One jet fuel deal, no gasoil trades

OTHER NEWS

- Oil prices climbed more than $1 on Wednesday, extending overnight gains after industry data showed U.S. crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves. O/R

- The Philippines' Department of Energy said on Wednesday it has issued a circular to establish state-owned reserves of crude oil, finished petroleum products and biofuels, which can be tapped if there are supply disruptions in the global market.

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


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