OUTLOOK: Sluggish demand to weigh on Asian oil products
By ERIC YEP and JACOB GRONHOLT-PEDERSEN
Asia's gasoil and jet fuel markets will likely remain steady in the coming week, supported by recent orders from Vietnam, but generally sluggish demand will continue to weigh.
Middle distillate premiums are also supported by news this week that Royal Dutch Shell is in the process of disposing of its last refinery in Australia.
However, traders say inquiries about gasoil cargoes for May delivery are yet to materialize.
"There haven't been any recent deals. The market is very quiet, and many Japanese cargoes are still available here," a North Asian trader said.
In Southeast Asia, weak economic activity is taking its toll on gasoil demand, with diesel consumption low as mining activity has slowed considerably.
"Asian refiners are feeling the brunt of lower middle distillate cracks -- quite a surprising development, considering that almost 2.3 million barrels a day of refining capacity is scheduled to be offline in the Asia-Pacific over April, according to our estimates," JBC Energy said in a note earlier this week.
It said going forward, some support may stem from China, where diesel prices were recently lowered, and the latest manufacturing data shows positive signs.
Sentiment in Asia's naphtha market is expected to stay depressed, as crackers have cut runs and petrochemical makers switched to liquefied petroleum gas, or LPG, a rival feedstock.
Asian naphtha cracks have dropped steeply in the past weeks also due to arbitrage inflows from the West after reaching historical highs in February.
Japan's naphtha stocks fell slightly in the past week to 1.74 million kilolitres as of March 30 from 1.75 million a week earlier, suggesting continued low demand.
In Singapore, light distillate inventories rose 6.8% in the past week to 11.4 million barrels, the highest level since Jan. 9.
Dow Jones Newswires