SINGAPORE: Asia's cash differentials for jet fuel dipped on Tuesday on concerns that seasonal heating demand for the distillate fuel might be subdued this year due to forecasts for warmer winter temperatures.
Cash differentials for jet fuel widened their discounts to 68 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 66 cents a barrel on Monday.
The winter months in the northern hemisphere typically bring peak demand for kerosene that is closely related to jet fuel and is widely used in heating. Jet refining margins determine the profitability of both.
Refining margins for jet fuel dipped to $17.73 a barrel over Dubai crude during Asian trading hours on Tuesday, from $18.46 a barrel on Monday.
"The fourth quarter or winter is jet (demand) season. But this year, it is not as of yet. The crack margin is okay, but the cash differential is not as expected or as we've seen in the past," a trader said.
"This year so far, most people see Japan will not be as cold as last year. So, we'll have to wait for colder weather... Also, there are ample jet supplies in the region right now in terms of spot cargoes," she added.
Temperatures in Tokyo would remain mostly warmer than normal over the next couple of weeks while a generally warmer winter is expected in China during December-February, weather data and forecasts from Refinitiv Eikon showed.
The physical jet fuel market in the Singapore window remained quiet with no bids or trades on Tuesday.
Meanwhile, refining margins for gasoil with 10ppm sulphur content fell to their weakest in over three months on the back of muted buying interests and increasing supplies.
The benchmark gasoil margins were at $15.52 a barrel over Dubai crude, the lowest since Aug. 9. They were at $15.90 a barrel on Monday.
Cash discounts for 10ppm gasoil narrowed to 37 cents a barrel to Singapore quotes on Tuesday from a discount of 38 cents a barrel on Monday.
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