Asia distillates-gasoil cash discounts widen amid mounting supplies
SINGAPORE, Sept 25 (Reuters) - Asia's cash discounts for 10 ppm gasoil widened on Friday, hurt by subdued buying interest for physical cargoes amid abundant supplies available in the region. Cash differentials for 10 ppm gasoil were at a discount of 66 cents a barrel to Singapore quotes on Friday, compared with a discount of $0.63/bbl a day earlier.
The gasoil spot discounts have more than doubled over the last one month. Higher gasoil exports from China and India last month have added to an existing supply glut, especially as lack of arbitrage opportunities are keeping the barrels trapped within the region, trade sources said.
India's gasoil exports this month are expected to close slightly higher than August, while Chinese exports would likely remain elevated through the fourth quarter, Refinitiv oil research assessments showed. The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and Northwest Europe, traded around -$0.92/t on Friday, typically making it unworkable for arbitrage shipments. Arbitrage is usually profitable when the EFS trades at about -$15/t or below, though it also depends on other factors such as freight rates, according to traders.
Refining profit margins for 10 ppm gasoil, which have dropped about 27% this week, were up $0.18 on Friday at $2.15/bbl over Dubai crude during Asian trading hours.
ARA STOCKS - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped 5.5% to 2.8 MMt in the week to Sept. 24, data from Dutch consultancy Insights Global showed. The data showed ARA jet fuel inventories fell 1.7% to 938,000 t. Compared with a year earlier, ARA gasoil inventories were down 0.2%, while jet fuel stocks were 43% higher.
OTHER NEWS - Crude oil processed by Indian refiners slipped 26.4% from a year ago in August, the most in four months, as fuel demand remained subdued on sky-rocketing coronavirus cases that hindered industrial and transport activity. - Oil prices edged higher on Friday but were set for a weekly decline due to increasing concerns about the impact on fuel demand of a widespread resurgence in coronavirus infections, as well as some concern about the likely return of exports from Libya.
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