The Asian middle distillates complex is expected to continue to see divergence in the week started May 30. In the gasoil sector, industry sources said the demand recovery in Europe is likely to offset sluggish demand in Asia, while limitations to air travel because of pandemic-related restrictions would continue to weigh on the jet fuel/kerosene market.
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** The front-month June-July jet fuel/kerosene time spread remained steady day on day at minus 25 cents/b at 0255 GMT May 31, S&P Global Platts data showed.
** The FOB Singapore jet fuel/kerosene cash differential was sliding in the week ended May 29 as tepid demand weighed on the market sentiment. The cash differential was assessed at minus 27 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on May 28, marking a 4 cents/b decline on the week, Platts data showed.
** Singapore was a net importer of aviation fuels and kerosene in the week ended May 26. Inflows were registered at 71,062 mt, of which most came from India at 62,096 mt. Meanwhile, exports totaled 45,386 in the week, mostly to Vietnam and Australia at 25,697 mt and 15,471 mt, respectively.
** Global passenger numbers are expected to recover to 52% of pre COVID-19 levels in 2021, according to the International Air Transport Association, or IATA. IATA also expects this recovery to continue in 2022, with passenger volumes bouncing back to 88%, and eventually surpassing 2019’s levels with a 105% growth by 2023.
** The third quarter-fourth quarter jet fuel/kerosene swap spread — an indication of near-term sentiment — averaged minus 27 cents/b May 24-28, widening 10 cents/b from the previous week’s average of minus 17 cents/b.
** The front-month June-July gasoil market structure was pegged at plus 8 cents/b at 0300 GMT May 31, rising slightly from plus 7 cents/b assessed at the Asian close on May 28, Platts data showed.
** The front-month June-July Exchange of Futures for Swaps, or EFS, spread was pegged at minus $5/mt at 0300 GMT May 31, widening from the May 21 assessment of minus $4.26/mt, Platts data showed.
** The Asian gasoil market may remain rangebound in the week ahead, with uncertain demand balancing expectations of lower supply from China. Still, some market participants said while gasoil supplies from China may trend lower, production from other countries may rise as they ramp up output due to falling demand for light cycle oil. Traders said gasoil supply from South Korea, especially for the medium sulfur grade, has already increased, and they anticipate further incremental supplies of ultra low sulfur gasoil as well as higher sulfur gasoil in the weeks ahead.
** Evidencing this, cash differentials for the 10 ppm and 500 ppm sulfur gasoil grades have come under pressure over the past week. At the Asian close May 28, the FOB Singapore cash differential for the 10 ppm sulfur gasoil grade weakened to a more than two-week low of plus 3 cents/b to the Mean of Platts Singapore gasoil assessments, while the cash differential for the medium sulfur gasoil grade touched a one-year low of minus $2.28/b to MOPS gasoil assessments, FOB Singapore.
** The Q3-Q4 gasoil swap spread — an indication of near-term sentiment — averaged plus 41 cents/b May 24-28, narrowing 11 cents/b from the previous week’s average of plus 52 cents/b.