SINGAPORE: Asia's gasoil cash differential for benchmark 500ppm grade rose to its highest level this year on Tuesday as deals in the Singapore market traded at firm premiums despite persistent concerns of ample supplies, traders said.
Singapore-based trader Hin Leong picked up the only two offers for 500ppm gasoil made in the Platts window by Vitol and Unipec each at a premium of 40 cents a barrel above Singapore quotes, industry sources said. Together, both cargoes totalled 300,000 barrels of the benchmark gasoil.
The last time a 500ppm cargo was traded in the Platts window was on April 28 when a total of 400,000 barrels of the fuel were sold through two deals at a premium of 20 cents a barrel above Singapore quotes.
The purchase, characterised by it's strong premiums, comes amid an unrelenting oversupply in gasoil inventories around the world and ahead of increasing production as refiners restart production as peak maintenance wanes, traders said.
Global gasoil cracks came under pressure in recent days after a slight improvement over April, JBC Energy said in its daily report on Tuesday. "Fundamentals point to lengthening balances in key exporting countries, like the US, Russia and India," said the report.
"Looking ahead, we see little upside potential for middle distillates amid continued weakness in demand (aside from a few bright spots - i.e. India) and the continued ramp up of runs over the summer months," JBC said.
By contrast, active physical trading saw jet fuel cash differentials slip by 8 cents to a discount of 37 cents a barrel below Singapore quotes, its lowest since Jan. 29.
Hin Leong was on the selling side of the three jet fuel cash deals reported in the Platts window, offering a total of 300,000 barrels of the aviation fuel to Vitol at a discount of 30 to 35 cents a barrel to Singapore quotes, industry sources said. All three cargoes are scheduled for delivery between June 6 and 10.
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