Asia Distillates-Gasoil cracks see biggest weekly drop in 10 weeks

SINGAPORE (Reuters) - Asian refining margins for 10 ppm gasoil dropped on Friday, recording their biggest weekly decline in 2-1/2 months, as the region is awash with supplies due to higher exports from India and China amid limited arbitrage opportunities. Refining margins, also known as cracks, for 10 ppm gasoil slipped 42 cents to $5.80 a barrel over Dubai crude during Asian trading hours on Friday.

Cracks have fallen 15.5% this week, the steepest weekly decline since May 29, Refinitiv Eikon data showed. Renewed lockdown measures in several countries in the wake of a resurgence in coronavirus infections is impairing use of the industrial and transportation fuel that found pockets of demand over the last two months as some governments relaxed virus-led restrictions. China's gasoil exports this month are expected to be around 1.5 million tonnes, compared with 1.25 million tonnes in July, Refinitiv oil research assessments showed. Meanwhile, August gasoil exports from India are forecast to reach up to 2.5 million tonnes, according to the assessments. This compares with about 2.2 million tonnes of gasoil the country exported last month. The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and Northwest Europe, traded around minus $11 per tonne on Friday, typically making it unworkable for arbitrage shipments. Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below, though it depends on other factors such as freight rates as well, according to traders. Cash premiums for gasoil with 10 ppm sulphur content slipped to 4 cents a barrel to Singapore quotes on Friday, down from 11 cents a day earlier. 

Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub <STK-GO-ARA> dipped 2.2% to 2.5 million tonnes in the week to Aug. 6, data from Dutch consultancy Insights Global showed. The data showed ARA jet fuel inventories rose 1.5% to 951,000 tonnes. 

China's crude imports in July surged 25% from a year earlier, as massive orders made while prices collapsed in April arrived and as some shipments delayed at ports in June finally cleared customs.

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