Asia Distillates-Gasoil margins climb on expectations of tighter supply

SINGAPORE,  (Reuters) - Asian refining margins for 10ppm gasoil rose on Monday to their highest levels in about four weeks, buoyed by weaker crude prices as well as expectations of lower availability of barrels in the market after middle distillate inventories in Singapore dropped last week.

Refining margins, also known as cracks, for gasoil with 10ppm sulphur content rose to $15.05 a barrel over Dubai crude during Asian trading hours, compared with $14.50 a barrel on Friday.

Singapore middle distillates stocks fell 2 percent last week to 11.6 million barrels in a third straight week of draw-downs, data from Enterprise Singapore showed on Thursday. The benchmark gasoil margins have gained about 10 percent over the last two weeks.

Crude oil prices fell by around 1 percent on Monday as drilling activity in the United States, currently, the world's largest oil producer, picked up and financial markets were pulled down by trade concerns. The middle distillate market, in general, will be supported by seasonal maintenance at some refineries in the region over the next couple of months which will reduce supplies, trade sources said.

Cash discounts for 10ppm gasoil GO10-SIN-DIF were at 33 cents a barrel to Singapore quotes on Monday, compared with a discount of 32 cents a barrel on Friday. Quite a few gasoil cargoes from Asia are heading towards the West, but the arbitrage window is not quite open, traders said.

The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and North West Europe, was around minus $16 per tonne on Monday, according to Refinitiv Eikon data. Two newly-built very large crude carriers (VLCCs) -- Ascona and Olympic Laurel -- that loaded diesel cargoes in Asia on the maiden voyages last month are expected to discharge in West Africa, while two other newbuilds, Dijilah and Front Defender, are expected to discharge in Europe, traders said.

Meanwhile, cash differentials for jet fuel JET-SIN-DIF widened their discounts by a cent to be at 20 cents a barrel to Singapore quotes on Monday. Jet fuel cracks were at $14.21 a barrel over Dubai crude on Monday, up from $13.99 a barrel on Friday.

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