SINGAPORE: Asia’s cash differentials for cargoes of 10 ppm gasoil extended losses on Tuesday, falling to a more than one-month low amid lower deal values for cargoes of the fuel in the Singapore trading window and concerns of limited near-term demand.
The 10 ppm cash discount widened to minus 14 cents a barrel on Tuesday, its lowest since Jan. 28 and down from minus 4 cents in the previous session. The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and Northwest Europe, traded around minus $10.75 a tonne on Tuesday - a level that typically makes it unworkable for arbitrage shipments. The narrowing EFS discount meant that gasoil exports from Asia to Europe were uneconomical and is likely to limit arbitrage flows, trade sources said. Gasoil arbitrage to the west is usually profitable when the EFS trades at about minus $15 a tonne or below, though it also depends on factors such as freight rates. Indian state refiners’ daily diesel sales, which are related closely to economic growth and account for about 40% of overall refined fuel sales in India, fell by 5.3% in February, the largest decline in three months, preliminary industry data showed.
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