The Asia middle distillates market is experiencing reduced liquidity, with traders awaiting new offers from Chinese refiners. April export estimates for diesel and jet fuel parallel previous months, while refining margins see a slight decline. Cash differentials dropped, and oil prices saw an increase due to geopolitical concerns and Chinese economic stimulus plans.
The Asia middle distillates market experienced reduced discussions following a period of significant trading activity. Despite ICE gasoil futures continuing their upward trend, the east-west spread remained consistent. Traders are anticipating new offers from Chinese refineries, as sales activity for April is expected to commence shortly.
April export estimates from China indicate that diesel volumes will mirror March’s figures of approximately 400,000 metric tons, while jet fuel exports are projected to reach around 2.2 million tons. Refining margins for gasoil decreased for the second consecutive session this week, settling at approximately $13.30 per barrel amid a late surge in crude prices.
Trading activity remains subdued, particularly for 10ppm sulphur gasoil, which has seen a lack of bids. Cash differentials also fell by 3 cents, reflecting a tighter backwardation in the April-May paper time spreads. In the jet fuel sector, the arbitrage spread between Asia and the U.S. West Coast has significantly widened, indicating potential profitability and upcoming discussions amongst traders.
The regrade for April jet fuel remained largely unchanged at discounts of about $1.2 per barrel. Additionally, there have been no cash deals observed for middle distillates fuels. Preliminary reports suggest increases in U.S. crude oil stockpiles, while distillate and gasoline inventories are expected to have declined.
Recent events also include a minor incident involving a jet fuel shipment damaged after a tanker was struck by a cargo ship near England. Venezuela’s PDVSA is strategizing continuity in oil production despite the impending expiration of Chevron’s operational license. Furthermore, Chevron has acquired approximately 4.99% of Hess Corp. shares, signaling confidence in their planned acquisition. Oil prices rose over 1% recently, influenced by geopolitical instability and anticipated economic stimulus from China.
In summary, the mid-February trading landscape within Asia’s middle distillates market remains characterized by reduced liquidity and cautious anticipation of upcoming offers from China. Export projections and refining margins indicate stability, even as geopolitical events and operational strategy shifts within company structures add layers of complexity to the market dynamics.
Original Source: www.tradingview.com
