Asia’s middle distillates markets were little changed on Monday on persistently limited swaps and physical discussions in the open trading market, but traders are expecting more upbeat spot trading liquidity this week for March and were hopeful for demand to emerge.
Spot market activity is likely to pick up this week as several northeast Asian refiners continue their March-loading sales tenders ahead of the Lunar New Year holiday.
There is some unspoken confidence on demand picking up for March and April arrival cargoes, given that regional maintenance is gradually starting, one refinery source said, which could limit the weakness in spot market discounts compared with end-February.
Cash differentials GO10-SIN-DIF in the open trading market fell reflecting the lower-priced offers and a narrower backwardation between February and March swap prices. A buy-sell gap hindered deals, limiting overall market fluctuations.
Refining margins GO10SGCKMc1 for the transport and industrial fuel remained slightly above $24 a barrel.
Jet fuel refining margins JETSGCKMc1 trended in line with gasoil cracking margins as thin spot market liquidity resurfaced again after last session’s flurry of activity – despite the February-March backwardation structure easing slightly.
The arbitrage window between Asia and the U.S. West Coast remained opened, which sparked talks of increased cargo flows on this route soon, a second refinery source said.
Regrade JETREG10SGMc1 was little changed from the previous trading session, steadying at discounts of around $2.65 a barrel.
SINGAPORE CASH DEALS O/AS
– No deals for both fuels.
– Oil prices nudged higher on Monday, recovering from sharp falls last week, after Washington pledged to launch further strikes on Iran-backed groups in the Middle East and as Ukrainian drones struck southern Russia’s largest refinery.
– The European Commission will not add any new import bans in its next package of sanctions on Russia, EU diplomats said, as a 13th package proposal takes its final shape.