Asia’s diesel markets were back on an upward trajectory, with cash premiums and refining margins both nearly at two-month highs, as traders weighed a possibly tighter supply balance globally against shaky regional demand fundamentals.

The diesel exchange of futures for swaps (EFS) spreads also surged to nearly one-month high discounts, with ICE gasoil futures gains overnight being supportive. (LGOAEFSMc1)

Support through the week largely came from concerns about export supply disruption from Russia and lower-than-usual stockpiles globally going into the winter heating season in the northern hemisphere regions.

Traders were further concerned about a decline in spot availability from some regional exporters in the Middle East and northeast Asia due to refinery maintenance work.

Paper market backwardation widened starting mid-week, with timespreads widening to a two-month high of $1.50 a barrel as forward trading sentiment was bolstered by supply concerns even with discussions nearing the month-end.

Regional demand, however, remained shaky for now, given that it was an off-peak period due to weather-related reasons.

Refining margins (GO10SGCKMc1) continued to hover at two-month highs of nearly $22 a barrel.

The 10 ppm sulphur gasoil cash differentials (GO10-SIN-DIF) climbed to 1.5-month highs of $1.10 a barrel.

Jet fuel markets were also partially supported heading into the winter season, though traders were mixed on total October exports with current estimates at 2-2.2 million tons, as of Friday.

Trending similarly to gasoil, jet fuel cash premiums gained to slightly more than seven-month highs of $1.06 a barrel. (JET-SIN-DIF)

Regrade (JETREG10SGMc1) discounts narrowed slightly to $1.20 a barrel.

SINGAPORE CASH DEALS

– No deals for gasoil or jet fuel

INVENTORIES

– Gasoil stocks, which include diesel, independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage were higher by 1% at 2.18 million tons on weaker inland demand.

NEWS

– Oil prices edged up on Friday, on track to climb more than 4% for the week, as Ukraine’s attacks on Russia’s energy infrastructure prompted Moscow to curb fuel exports and brought it close to cutting crude output.
– Russia will introduce a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports, Deputy Prime Minister Alexander Novak was quoted as saying on Thursday, following a spate of Ukrainian drone attacks on Russian refineries.
– BP said on Thursday it expects global oil demand to grow until 2030, five years later than its forecast a year ago, pointing to slowed efforts to increase energy efficiency and reduce global carbon emissions.
Source: Reuters