Asia Distillates: Gasoil cash differentials drop to lowest in over a month

SINGAPORE: Asia’s cash differentials for 10 ppm gasoil dropped to their weakest level in more than a month on Monday, hurt by sluggish buying interests for physical cargoes, while prompt-month spread for the industrial fuel grade deepened its contango structure.

Cash discounts for 10 ppm gasoil widened by a cent to 27 cents per barrel to Singapore quotes, the biggest discounts since Jan. 27.

The regional gasoil market is being pressured by surging Chinese export volumes, while extended COVID-19 lockdowns in several markets continue to dampen demand recovery.

The market, however, is expected to get some support in coming weeks as refiners enter spring turnaround season, tightening supplies, trade sources said.

The March/April time spread, which flipped into a contango last week, traded at minus 15 cents per barrel on Monday, compared with minus 5 cents on Friday, Refinitiv Eikon data showed.

Refining margins, also known as cracks, for 10 ppm gasoil fell 14 cents to $6.52 per barrel over Dubai crude during Asian trading hours, a level not seen since Feb. 4.

CHINA’S CRUDE IMPORTS RISE

China’s crude oil imports for the first two months of 2021 reached 89.57 million tonnes, up 4.1% from a year ago and up 9.5% from the same period in 2019, bolstered by solid fuel demand and expanded refining capacity in the country.

• Shipment of crude oil in January and February is equivalent to 11.08 million barrels per day (bpd), according to data published on Sunday by the General Administration of Customs. Customs did not reveal a break down for individual months.

Brent crude futures climbed above $70 a barrel on Monday for the first time since the COVID-19 pandemic began, while US crude touched its highest in more than two years, following reports of attacks on Saudi Arabian facilities.

Iran has quietly moved record amounts of crude oil to top client China in recent months, while India’s state refiners have added Iranian oil to their annual import plans on the assumption that US sanctions on the OPEC supplier will soon ease, according to six industry sources and Refinitiv data.