SINGAPORE: Asia's cash differentials for jet fuel slipped on Tuesday, while the prompt month spread narrowed its backwardated structure.
Cash premiums for jet fuel dropped to 97 cents a barrel to Singapore quotes, compared with $1.01 a barrel on Monday.
However, the jet fuel profit margins, also known as cracks, are lingering near their highest levels in about three years.
Over the last month, the jet cracks have consistently stayed over $15 a barrel above Dubai crude, having climbed to as high as $18.03 in February when Japan and South Korea burnt more kerosene to fend off a wave of cold weather.
Jet fuel and kerosene are closely related and belong to the same grade of oil products, with jet fuel margins determining the profitability of both.
Gains in jet prices have historically been highly correlated with crude oil prices and the potential strength in crude markets will further support the aviation fuel going forward, analysts said.
Cash premiums for gasoil with 10 ppm sulphur content fell to 39 cents a barrel to Singapore quotes, on the back of a weaker deal on Tuesday. The premiums were at 43 cents a barrel a day earlier.
Unipec bought 150,000 barrels of 10ppm gasoil from Shell at a premium of 10 cents a barrel to Singapore quotes on Tuesday. By the close of the Singapore trading window, there were open bids at premiums of 40 cents a barrel.
The middle distillate cash differentials would likely come down once the refineries start ramping up supplies after the maintenance season is over in another couple of months, trade sources said.
Meanwhile, China's Ministry of Commerce released the second batch of refined product export quotas for this year.
China issued a total of 19.33 million tonnes of refined fuel export quotas under the general trade category, all to state-run firms, in the second batch of quotas.
"We continue to see a need for Chinese refiners to help balance global market tightness, in particular for middle distillates, and would not expect authorities to stand in the way of refiners if export margins are high enough," Vienna-based consultancy JBC Energy said in a note.
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