Asia distillates-gasoil cracks dip amid concerns over ample supplies
SINGAPORE, Dec 30 (Reuters) - Asian refining margins for 10-ppm gasoil slipped on Wednesday, weighed down by concerns that near-term supplies on the back of high regional refinery runs would weaken market fundamentals.
Although gasoil demand has improved in recent weeks, renewed lockdown measures in several markets to contain a new variant of the coronavirus are expected to dampen the pace of recovery in coming weeks, market watchers said.
Refining margins, also known as cracks, for 10-ppm gasoil were at $6.21 a barrel over Dubai crude during Asian trading hours, down from $6.53 per barrel a day earlier.
Cracks for the benchmark gasoil grade in Singapore have gained 17.6% in the past month, but they are still currently about 57% lower than their seasonal average for this time of the year, Refinitiv Eikon data showed.
The front-month time spread for 10-ppm gasoil in Singapore, which has narrowed its contango by nearly 70% this month, traded at a discount of 15 cents per barrel on Wednesday.
The flattening contango structure would encourage traders to liquidate gasoil stocks from storages, putting pressure on the market and capping any major upside for the refining profits in the first half of 2021, industry analysts said.
INVENTORIES
- Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 8.2% to 5.03 million barrels in the week ended Dec. 28, data via S&P Global Platts showed.
- The weekly stocks in Fujairah have averaged 4.2 million barrels so far in 2020, compared with the weekly average of 2.4 million barrels in 2019, Reuters calculations showed.
- U.S. distillate stockpiles fell by 1.9 million barrels in the week to Dec. 25, counter to expectations for a build of 529,000 barrels, data from industry group the American Petroleum Institute (API) showed on Tuesday.
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