Singapore — The Asian middle distillates market is expected to see further downside amid persistent weakness in jet fuel due to tepid air travel demand, while sluggish demand against a backdrop of stubborn oversupply weighs on the gasoil complex.
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Register NowICE November Brent crude futures fell 33 cents/b on the day to $43.16/b at 0300 GMT Sept. 21, from $43.49/b at the 0830 GMT Asian close on Sept. 18.
JET FUEL/KEROSENE
** The front month October-November Singapore jet fuel timespread remained in a steep contango, pegged at minus 81 cents/b at 0300 GMT Sept. 21, narrowing 1 cent/b from minus 82 cents/b at the 0830 GMT Asian close on Sept. 18.
** The outlook for the Asian aviation sector remained clouded as international flights were mostly grounded. The aviation sector experienced renewed decline in international flight activity over the first half of September amid a resurgence in coronavirus cases, according to Cirium, a travel data and analytics company, signaling continuing headwinds for jet fuel demand.
** The Singapore Airlines group reported that it carried 39,800 passengers in August, up 17.4% month on month. However, the recovery brought little cheer as the volume was still 98.8% lower compared with the same period in 2019.
** Market sentiment firmed after Singapore and Japan agreed on a business track or "reciprocal green lane" to facilitate essential business and official travel between the two countries from Sept. 18, the countries said in a joint press released on Sept. 11.
** Industry sources said market participants are staying on the sidelines, awaiting fresh cues amid the lack of pricing indicators, and as such, the FOB Singapore jet fuel/kerosene cash differential was relatively stable, narrowing 1 cent/b week on week, and was assessed at a discount of $1.19/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Sept. 18 from MOPS minus $1.20/b on Sept. 11, Platts data showed.
** S&P Global Platts Analytics reported earlier that the Asian jet fuel/kerosene demand is projected to increase from 1.92 million b/d in first-half 2020 to 1.96 million b/d in H2, but still registering a significant decline of 925,000 b/d on the year.
GASOIL
** The front month October-November gasoil market structure was valued at a contango of 47 cents/b at 0300 GMT Sept. 21, widening 3 cents/b from the minus 44 cents/b assessment at the 0830 GMT close on Sept. 18, Platts data showed.
** The November Exchange of Futures for Swaps spread was pegged at plus $4.50/mt at 0300 GMT Sept. 21, strengthening from plus $3.89/mt at the Sept. 18 Asian close.
**Market participants said the gasoil market had appeared to have hit a bottom and stabilized, but cautioned that the overall outlook remains weak due to stubborn length in the region.
** The FOB Singapore 10 ppm cracking margin against front month cash Dubai bounced from its record low of plus $2.43/b on Sept. 18, up 55 cents/b, or 29.26%, day on day. The spread had plummeted to its lowest at $1.88/b on Sept. 17 after the benchmark FOB Singapore Gasoil assessments moved from 500 ppm sulfur gasoil to 10 ppm sulfur gasoil on Jan. 2, 2018.
** High throughput at Chinese refineries in order to meet robust domestic demand is likely to result in higher gasoil exports from the country, which will weigh on sentiment.
** Singapore's commercial onshore middle distillate stockpiles were at a near nine-year high of 15.26 million mt over Sept. 10-16 amid the slow drawdown and stubborn backlog, the latest Enterprise Singapore data showed. Stockpiles in the city-state had previously risen to 16.02 million mt over Aug. 27-Sept. 2, marking the highest level since July 6, 2011, Enterprise Singapore's data showed.
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September 21, 2020 at 12:33PM
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