SINGAPORE: Asian refining margins for 10 ppm gasoil jumped on Wednesday, scaling to a fresh high on record, riding on tighter supplies and expectations for stronger arbitrage demand from the West.
European diesel supplies have shrunk following the disruption of western sanctions imposed on Russia in response to its invasion of Ukraine, while trade sources said some Asian refineries plan to increase output in May to cash in on high prices for gasoil exports.
Refining margins, also known as cracks, for 10 ppm gasoil surged to a new record of $44.04 a barrel over Dubai crude during Asian trading hours, up from $31.56 per barrel a day earlier.
Cracks for the benchmark gasoil grade in Singapore have more than doubled in the last week, Refinitiv data showed.
Meanwhile, jet fuel refining margins jumped to $36.04 per barrel over Dubai crude on Wednesday, their strongest level on record, according to Refinitiv Eikon data that goes back to 2009. The jet cracks were at $24.42 per barrel on Tuesday.
Global jet fuel prices have surged to near 14-year highs in line with crude oil’s surge on supply shortfall worries, slamming air carriers and travellers with steep cost increases just as air travel was starting to recover from COVID-19 restrictions.
Jet fuel prices in Europe and the United States have posted similar gains, leaving global carriers who have already been hammered by COVID-19 over the last two years having to pass on higher costs via fuel surcharges and increased fares.
Cash differentials for jet fuel climbed to a premium of $4.41 a barrel to Singapore quotes, while cash premiums for gasoil with 10 ppm sulphur content rose to $7.87 a barrel to Singapore quotes on Wednesday.
Beijing has told Chinese state refiners to consider suspending exports of gasoline and diesel in April as the Ukraine war sparks supply concerns, three sources with knowledge of the matter said on Wednesday.
The pause, during a peak refinery maintenance season in Asia, could further tighten fuel supplies.
Middle-distillate inventories in the Fujairah Oil Industry Zone plunged 55.2% to 1.1 million barrels in the week ended March 7, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 1.9 million barrels so far this year, compared with a weekly average of 3.5 million barrels in 2021, Reuters calculations showed.
US distillate inventories, which include diesel and heating oil, fell by 5.5 million barrels in the week ended March 4, according to market sources, citing American Petroleum Institute figures.
No jet fuel trades, no gasoil deals. Asia’s liquefied natural gas (LNG) demand growth may cool this year as buyers baulk at record-high spot prices pushed even higher by Europe’s shift to the super-chilled fuel amid the Ukraine crisis, analysts and industry sources said.
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