Asia Distillates-Gasoil on the rise

Asia's middle distillate markets firm on Friday, buoyed by a firming demand outlook and tighter regional supplies. Recovering industrial demand due to easing COVID-19 restrictions and increased usage of the fuel for power generation on the back of high coal and gas prices are boosting the markets, trade sources said.

Rising natural gas and thermal coal prices are likely to see increased gas-to-oil switching, supporting demand for residual fuel oil and gasoil, ANZ Research said in a note.

ANZ analysts raised their fourth-quarter 2021 crude oil demand forecast by 450,000 bpd amid rising gas-to-oil switching in the power generation and industrial sectors and a continued recovery in demand for transportation fuels. The front-month gasoil time spread climbed to 72 cents a barrel, its highest since December 2019, Refinitiv data in Eikon showed.

Meanwhile, the front-month jet fuel crack firmed to $12.32 a barrel over Dubai crude during Asian trading hours despite firming crude oil prices. The jet crack hit a near two-year high of $13.50 a barrel on Wednesday.

Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 1% to 2.03 MM tons in the week ended Oct. 7, according to Dutch consultancy Insights Global.

The gasoil stockpiles, which hit a near 1-1/2 yr low in late-September, edged up slightly on the back of higher imports from the Middle East Gulf. ARA jet fuel inventories fell 6% this week to a near six-month low of 867,000 tons. Some jet fuel is being blended into winter-specification diesel, draining stocks. Jet coming from Russia, some product moving to Britain, some jet blended into winter spec diesel.

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