Asia Distillates: Gasoil cash premiums, cracks gain on tighter supplies

SINGAPORE: Asian refining margins for 10 ppm gasoil rose for a second straight session on Thursday, while cash premiums for the industrial fuel grade rose after middle distillate inventories in Singapore slumped to their lowest level in more than 3-1/2 years.

Refining margins, also known as cracks, for 10 ppm gasoil jumped to $11.72 a barrel over Dubai crude during Asian trading hours, the strongest since Nov. 19. They were at $10.88 per barrel a day earlier.

The gasoil market is currently buoyed by limited regional supplies, while the weakness in raw material crude prices this week is supporting the refining profits, trade sources said.

Cracks for the benchmark gasoil grade in Singapore, which have averaged $12.42 a barrel in November, were currently about 2% lower compared with their five-year seasonal average for this time of the year, Refinitiv data showed.

Cash premiums for gasoil with 10 ppm sulphur content rose to 26 cents per barrel to Singapore quotes on Thursday, up from 20 cents a barrel on Wednesday.

Singapore’s middle distillate inventories dropped 5.2% to 8.01 million barrels in the week to Dec. 1, according to Enterprise Singapore data.

Weekly Singapore middle distillate inventories have averaged 12.2 million barrels this year, compared with an average of 13.9 million barrels in 2020, Reuters calculations showed. This week’s stocks were about 50% lower than a year earlier.

US distillate inventories, which include diesel and heating oil, rose by 2.2 million barrels in the week to Nov. 26, versus expectations for a 462,000-barrel rise, the Energy Information Administration said on Wednesday.