Singapore — The Asian middle distillate market opened the week on a steady note with industry sources saying that both jet fuel and gasoil are are still supported amid tight supplies due to curtailed output in the region. Mounting fears of a fresh wave of coronavirus infections, however, could derail the recovery for the middle distillates, they added.
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Register NowAugust ICE Brent crude futures slipped $1.32/b to $40.21/b at 0300 GMT on June 29, down from $41.53/b at the 0830 GMT Asian close on June 26.
JET FUEL/KEROSENE
** The front month July/August Singapore jet fuel timespread kicked off the week on a slightly firmer note, narrowing 4 cents/b from June 19 to minus 70 cents/b at 0300 GMT on June 29.
**The global aviation sector is poised to see further respite in the near term as many countries are softening their stance on travel restrictions, and the latest data from the UN World Tourism Organization showed that 22%, or 48 out of 217 destinations worldwide have started to ease travel restrictions, with Europe leading the way with 37 destinations. The US and the Asia Pacific came in second and third with six and three destinations, respectively,
** That said, the Asian jet fuel market also saw some signs of weakness amid fears of a resurgence of the coronavirus pandemic, which led to the fall in the FOB Singapore jet fuel price. At the 0830 GMT Asian close on June 26, the Singapore jet fuel/kerosene price registered at $41.78/b, falling $2.58/b, or 5.82%, week on week, Platts data showed.
** According to preliminary data released by the Association of Asia Pacific Airlines, Asia Pacific airlines carried only 785,000 international passengers in May, marking a 97.5% plunge year on year. Air cargo market was similarly weak, and air cargo demand -- as measured in freight tonne kilometres -- fell by 19% year on year.
** A weaker outlook was also observed with the Q3/Q4 quarterly jet fuel/kerosene spread -- an indication of near-term sentiment -- widening 55 cents/b week on week to minus $2.29/b at the 0830 GMT Asian close on June 26, Platts data showed. Industry sources noted that a second wave of COVID-19 infections will once again curtail air travel, and lead to poor demand for aviation fuels.
GASOIL
** The backwardation in the Singapore gasoil front month July/August structure was valued at plus 46 cents/b at 0300 GMT on June 29, unchanged from June 26.
** The front month July Exchange of Futures for Swaps spread was pegged at $5.25/mt at 0300 GMT June 29, widening from plus $3.58/mt assessed at the June 26 Asian close.
** The firming in the front month EFS reverses earlier downward pressure seen from the inflow of gasoil from the Persian Gulf into Asia, with traders saying that persistent supply-side concerns have displaced those earlier worries.
** Still, traders said the supply outlook for gasoil may change in the near term, with balances from major gasoil exporters China and India, in particular, being watched closely. Market sources have said they expect August gasoil exports from China to be higher as compared with July volumes, which have been estimated at around 600,000 mt.
** The ongoing monsoon season in India may also see the country's gasoil exports swell, as has been the case in the past. But some traders said the monsoon season effect may be a non-factor this year, with Indian refinery runs still capped due to COVID-19 considerations as well as poor refining margins.
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June 29, 2020 at 10:59AM
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Asia middle distillates - Key market indicators this week - S&P Global
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