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Asia distillates-jet fuel cash premiums drop on ample supply, weak demand

Asia’s cash premiums for jet fuel dropped, weighed down by abundant supplies and lackluster aviation demand, while traders were skeptical seasonal heating demand for kerosene would likely remain weak due to a warmer winter this year.

Cash differentials for jet fuel fell to a premium of 5 cents per barrel to Singapore quotes on Tuesday, down from a 35-cents premium a day earlier.

Refining profit margins or cracks for jet fuel were at $14.95 per barrel over Dubai crude during Asian trading hours on Tuesday, compared with $14.76 a barrel on Monday.

Winter in the northern hemisphere typically brings peak heating demand for kerosene, which belongs to the same grade of oil products as jet fuel, with jet refining margins determining the profitability of both.

But temperatures in Tokyo are expected to stay well above normal for the next couple of weeks, while temperatures in Seoul would remain mostly higher than normal over the next 15-day period, weather forecast models on Refinitiv Eikon showed.

Meanwhile, cracks for gasoil with 10 parts per million (ppm) sulphur content rose to $15.60 per barrel over Dubai crude on Tuesday, their highest in a month. Cracks for the benchmark gasoil grade in Singapore were at $15.01 per barrel on Monday.

Cash premiums for 10ppm gasoil climbed to 65 cents per barrel over Singapore quotes on Tuesday, up from 60 cents per barrel in the previous session.

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