Asia’s middle distillates market displays reduced activity, with traders anticipating April offers from Chinese refiners. Diesel and jet fuel exports are estimated similar to March levels. Refining margins have decreased amid low trading activity, while geopolitical issues and inventory trends impact market dynamics.
The current market for Asia’s middle distillates shows decreased trading activity, particularly following an active prior day. While the front-month east-west spreads exhibit little change, ICE gasoil futures continue their upward movement. Market participants are now anticipating upcoming offers from Chinese refiners as April sales are expected to begin shortly, with diesel export estimates at approximately 400,000 metric tons and total jet fuel volumes around 2.2 million tons for April.
Refining margins have decreased for a second consecutive day, positioned around $13.30 per barrel, despite a late spike in crude prices. Trading activity remains subdued, with diminished bids for 10ppm sulphur gasoil. Cash differentials have also declined by 3 cents, reflecting a tighter backwardation in the April-May timespreads. In the jet fuel sector, the arbitrage spread between Asia and the U.S. West Coast has notably widened, indicating potential profit-driven discussions.
Recent developments include no recorded cash deals for either fuel type lately. It is anticipated that U.S. crude oil stockpiles have increased in the last week according to early polls, while distillate and gasoline inventories are likely down. Additionally, a cargo ship incident involving a military-contracted tanker resulted in damage to one jet fuel tank, as reported by U.S. logistics firm Crowley.
PDVSA is formulating scenarios to sustain operations at its major venture with Chevron, as its operating license approaches expiration next month. Chevron’s recent acquisition of approximately 4.99% of Hess Corp’s shares is seen as a positive signal toward finalizing the acquisition of Hess. Furthermore, oil prices have surged over 1%, attributed to geopolitical tensions in the Middle East and anticipated economic measures from China. Political unrest continues as Yemen’s Houthis remain firm in their stance against Israeli shipping in the Red Sea despite external pressures.
In conclusion, the middle distillates market in Asia is experiencing diminished trade activity with traders awaiting new offers from China. The reduced refining margins and lower cash differentials further indicate the current market challenges. As geopolitical factors and local developments unfold, traders will remain vigilant of changes influencing supply and demand dynamics in both the refining and transportation sectors.
Original Source: www.tradingview.com
