Asian diesel markets firmed by 2% as regional trading sentiment was bolstered by robust ICE gasoil movements upward late on Wednesday, though window discussions were curtailed.

The east-west price spread (LGOAEFSMc1) widened to a two-week high discount of nearly $50 per metric ton, trade sources say, which further emphasizes that Europe’s derivatives markets are much firmer than Asia.

Traders attributed firmer prices in Europe to persistently limited supplies, with refinery runs there slightly weighed on by unexpected outages even as commercial stockpiles remained on the low side.

The 10ppm sulphur diesel refining margins (GO10SGCKMc1) gained back to nearly a two-week high of around $20 a barrel, with front month paper markets surging from the previous trading session.

Meanwhile, on the Asia spot front, some refiners were in preparation to start their August sales in line with earlier expectations, with at least two looking to allocate their term cargoes first.

Diesel cash differentials (GO10-SIN-DIF) gained to premiums of $1.3 a barrel, firming from before because of the stronger derivative market structure. Bids and offers continued to fluctuate in a wide gap.

For jet fuel, traders are still shipping spot July cargoes to Europe given the decline in freight costs, overall healthy margins there and continuously long supplies in the region.

To date, up to four cargoes of at least 90,000 metric tons will likely be shipped from South Korea or China to Northwest Europe, shipping sources said.

Europe is slightly short on cargoes given the refinery shutdowns and stronger demand during the peak summer travel season, one Singapore-based trade source said.

Regrade (JETREG10SGMc1) closed the trading session at discounts of around $1.7 a barrel, wider than before given the strength in gasoil markets.

The arbitrage between Asia and the U.S. West Coast also widened significantly, limiting overall weakness in Asian jet fuel prices

SINGAPORE CASH DEALS

– No deals for both fuels

INVENTORIES

– U.S. crude and gasoline stocks rose last week while distillate inventories fell, market sources said, citing American Petroleum Institute figures on Tuesday.

– Middle distillates stocks stored at Fujairah Oil Industry Zone hit its highest level since end-March, with inventories at 2.722 million barrels in the week of June 30, according to industry information service S&P Global Commodity Insights.

NEWS

– Oil futures were little changed on Wednesday as markets weighed expectations of more supply from major producers next month, a softer U.S. dollar and a mixed bag of economic and market indicators from the U.S., the world’s largest oil consumer.

– Oil output in Kazakhstan, one of the world’s 10 biggest producing countries, returned to growth last month and matched an all-time high, as the Chevron-led CVX.N Tengiz field ramped up, a source familiar with the data told Reuters on Tuesday.

– The Iranian military loaded naval mines onto vessels in the Persian Gulf last month, a move that intensified concerns in Washington that Tehran was gearing up to blockade the Strait of Hormuz following Israel’s strikes on sites across Iran, according to two U.S. officials.
Source: Reuters