SINGAPORE: Asia’s refining profit margins for 10 ppm gasoil climbed for a third consecutive session on Friday, posting their first weekly rise in four, supported by tight regional supplies.
Trade sources, however, said further gains would likely be capped by the hit to demand recovery by the Omicron variant of the coronavirus, while Chinese and Indian exports are expected to increase in coming weeks.
Refining margins, or cracks, for 10 ppm gasoil rose 57 cents to a more than two-week high of $12.29 a barrel over Dubai crude during Asian trading hours. The cracks have gained 30% this week, their steepest weekly gain since October last year.
The current tightness in Asia’s gasoil supply is partly due to lower exports from China in recent months, but according to Refinitiv Oil Research assessments the country is expected to return to the spot market in December, exporting at least 250,000 tonnes.
Gasoil exports from India are also expected to see an uptick as domestic demand drops after the peak festive season, while refiners have ramped up run-rates, market watchers said. Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 44 cents per barrel to Singapore quotes, up from a 26-cent premium a day earlier.
Global jet fuel markets have come under renewed pressure as some countries returned to border restrictions to keep the new Omicron coronavirus variant at bay, prompting travellers to reconsider their plans.
US plans to require inbound international passengers to be tested for COVID-19 within one day of departure, regardless of vaccination status, while South Korea halted quarantine exemptions for fully vaccinated inbound travellers and has now made a 10-day quarantine mandatory.
Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub slipped 1.1% to 1.8 million tonnes in the week ended Dec. 2, according to Dutch consultancy Insights Global.
ARA jet fuel inventories inched up 0.2% this week to 809,000 tonnes.
OPEC and its allies agreed on Thursday to stick to their existing policy of monthly oil output increases despite fears that a US release from crude reserves and the new Omicron coronavirus variant would lead to a fresh oil price rout.
The US administration plans to propose in days the amount of biofuels oil refiners must blend into their fuel mix this year and next year, as it reaches out to lawmakers to discuss the move, three sources familiar with the matter said.
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