The Asian middle distillates market is currently limited, with traders awaiting April offers from Chinese refiners. Diesel exports are estimated at 400,000 tons, and jet fuel volumes at 2.2 million tons. Refining margins have decreased as market activity remains thin and cash differentials have narrowed. Additionally, geopolitical events are impacting oil prices and supply strategies.
The middle distillates markets in Asia exhibited limited activity following a prior surge, with the east-west front-month remaining stable while ICE gasoil futures maintained an upward trajectory. With mid-month passed, traders are anticipating offers from Chinese refiners to commence, indicative of the approaching April sales period.
For the month of April, diesel export estimates from China are projected to replicate March’s figures, approximating 400,000 metric tons, while total jet fuel volumes are expected to reach around 2.2 million tons. Refining margins have diminished for the second consecutive session this week, resting at approximately $13.30 per barrel due to a recent increase in crude market prices.
Market activity remains subdued, particularly with regards to bids for 10 ppm sulphur gasoil. Cash differentials have fallen by 3 cents, reflecting a tighter backwardation in the April-May paper timespreads. In contrast, the arbitrage spread for jet fuel between Asia and the U.S. West Coast has significantly widened, leading traders to foresee upcoming discussions driven by this increased profitability.
Currently, there are no recorded deals for either gasoil or jet fuel in the Singapore cash markets. A preliminary Reuters poll indicates a rise in U.S. crude oil stockpiles last week, while inventories of distillates and gasoline likely declined.
Recent reports detail that only one jet fuel tank was damaged after a U.S. military-contracted tanker was struck off the coast of England. Furthermore, Venezuela’s PDVSA has devised three operational strategies in anticipation of continuing oil production and exports through its largest joint venture with Chevron, as their operational license nears expiration next month.
Chevron has acquired about 4.99% of Hess Corporation’s common shares, a move indicating confidence in the pending acquisition of the company. Oil prices saw an increase of over 1% on Tuesday, marking the highest levels since the beginning of the month, largely supported by instability in the Middle East and China’s economic stimulus plans. Meanwhile, the Yemeni Houthi group has openly stated their refusal to decrease actions against Israeli shipping in response to U.S. pressures.
The Asian middle distillates market is currently seeing diminished liquidity amid anticipation for April offers from China. While diesel export estimates mirror those of March, refining margins are under pressure amid fluctuating crude prices. The broadening arbitrage for jet fuel hints at potential profitable trading opportunities, despite the lack of current cash deals. Broader geopolitical developments and strategic market actions signify influence on oil prices and inventory levels.
Original Source: www.tradingview.com
