Asia Distillates: Gasoil cash premiums, cracks surge to record highs

SINGAPORE: Asia’s cash premiums for 10 ppm gasoil climbed for a seventh straight session on Monday, surging to a multi-year high, while refining margins for the fuel grade soared to their strongest level on record.

Gasoil market fundamentals across the globe have strengthened amid fears of a potential near-term shortage as buyers avoid Russian supplies, while the Asian market is expected to attract even stronger arbitrage demand from the West in the coming days.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of $5.69 a barrel to Singapore quotes, a level not seen since Singapore’s benchmark gasoil grade was shifted to 10ppm in January 2018, from 500ppm earlier. They were at a premium of $4.89 per barrel on Friday.

Refining margins, also known as cracks, for 10 ppm gasoil jumped to $33.70 a barrel over Dubai crude during Asian trading hours, up from the previous all-time peak of $25.95 per barrel hit on Friday.

Meanwhile, refining profits for jet fuel rose for a third consecutive session on Monday to $26.17 a barrel over Dubai crude during Asian trading hours, their strongest level on record according to Refinitiv Eikon data that goes back to 2009.

The price of oil has surged to its highest level since 2008 after Russia’s invasion of Ukraine, adding to airline costs at a time when carriers have been struggling to recover from a pandemic-related dip in demand.

China’s crude oil imports for the first two months of 2022 fell nearly 5% from a year earlier, data showed on Monday, as independent refiners, also known as teapots, curbed production because of narrowing margins and government curbs.

Imports during the January-February period totalled 85.14 million tonnes, or about 10.53 million barrels per day (bpd), compared with 11.08 million bpd for the same period a year earlier, the General Administration of Customs said on Monday, without giving a breakdown for the individual months.

Two gasoil deals, no jet fuel trades. Oil prices spiked to their highest levels since 2008 on Monday as the United States and European allies weighed a Russian oil import ban and delays in the potential return of Iranian crude to global markets fuelled supply fears.