Singapore — Spot supply remained tight in Asian middle distillates market July 20 on the back of planned and unplanned production curtailments at regional refineries, while participants said demand could be impacted in the coming week by increasing unease over the rise in coronavirus infections around the globe.
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Register NowSeptember ICE Brent crude futures had retreated to $42.85/b at 0300 GMT July 20, down 24 cents/b from $43.09/b at the 0830 GMT Asian close on July 17.
JET FUEL/KEROSENE
** The front month August/September Singapore jet fuel timespread kicked off the week on a relatively stable note, widening 1 cent/b from July 17 to minus 50 cents/b at 0300 GMT July 20.
** Market participants remained on the sidelines awaiting fresh pricing cues amid a slew of conflicting market indicators. Cathay Pacific Airlines has announced that it expects to incur substantial losses for the first half of 2020 due to the demand destruction wrought by the coronavirus pandemic, but added it will increase flight operations to 10% in August as strict border controls appear to be easing.
** Cathay's announcement comes as a recent uptick in capacity by Asian airlines provides some support to jet fuel prices. The Singapore cash differential for jet fuel stood at a discount of 14 cents to the Mean of Platts Singapore jet fuel/kerosene assessment July 17, rising 15 cents/b or 52% from the week before, S&P Global Platts data showed.
** Further down the curve, the Q4/Q1 jet fuel/kerosene spread widened 25 cents/b week on week to minus $2.06/b July 17, Platts data showed.
** That said, Asia-Pacific airlines continue to face headwinds and will likely be hit the hardest by the COVID-19 pandemic, with estimated losses of $29 billion in 2020, which is more than one-third of the $84.3 billion in losses forecast for the global aviation sector in the year, the International Air Transport Association said in early July.
GASOIL
** The backwardation in the Singapore front month August/September structure was valued at plus 12 cents/b at 0300 GMT July 20, inching up from plus 11 cents/b at the July 17 Asian close.
** The front month August Exchange of Futures for Swaps spread was pegged at minus $2.50/mt at 0300 GMT July 20, widening from minus $2.10/mt at the July 17 Asian close.
** Reflecting the supply tightness in the region, Singapore's middle distillate commercial stockpiles hit a 14-week low in the week to July 15, latest Enterprise Singapore data showed, as a persistent lack of regional gasoil cargoes fueled healthy export flows to meet rising demand in Southeast Asia and Oceania. According to the government agency, total stocks of gasoil, kerosene and jet fuel edged down 1.76% to 13.37 million barrels in the week to July 15 from 13.61 million barrels the week before.
** Singapore maintained its status as a net exporter of gasoil, with outflows more than double inflows in the week ended July 15. Industry sources attributed the robust exports, which surged 136.2% on the week to 565,783 mt, to steady demand for gasoil, especially for prompt cargoes.
** The focus this week is the August export program from Northeast Asia, mainly South Korea and China, for fresh pricing cues, industry sources said.
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July 20, 2020 at 11:57AM
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Asia middle distillates - Key market indicators this week - S&P Global
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