Singapore — Asian middle distillates back-pedaled in the second week of September, tracking weaker demand which saw the gasoil and jet market giving up some of its gains from the start of the month. In the Asian gasoil market, sentiment was still buoyant for the benchmark FOB Singapore 10 ppm sulfur gasoil grade with traders saying that demand continued to be steady even as regional supply balances were still seen limited.
The front-month October/November Singapore gasoil timespread remained rangebound over the same period to be assessed at plus 66 cents/b Friday, up a cent/b from the start of the week.
Meanwhile, the Q4/Q1 timespread dipped 11 cents over the week to be assessed at plus 94 cents/b Friday.
Traders said late last week that while the cash differential for the FOB Singapore 10 ppm sulfur gasoil grade has been rangebound for a while now, it was more a function of the product having found equilibrium in the market.
"It's at quite an acceptable level for both sides, sellers as well as buyers," a trader said last week.
"It [the FOB Singapore 10 ppm sulfur gasoil cash differential] may be rangebound, but it's maintaining on the high side. And while further push-up may be harder, it's still the high demand season where we see winter demand activities in Korea and Japan for stockpiling kerosene. The recent typhoons in North Asia are also supportive factors as some refineries had to suspend loadings due to weather-related issues," he added.
At the Asian close Friday, the cash differential for 10 ppm sulfur gasoil loading from Singapore was assessed at plus 60 cents/b to the Mean of Platts Gasoil assessments, FOB Singapore, down 3 cents/b from Thursday.
Looking ahead, market participants were heard to be awaiting the results of the very first gasoil buy tender from the Philippines' PNOC Exploration Corporation.
The company issued a tender on August 24 for 50,000 mt of 50 ppm sulfur gasoil, with a view of subsequent shipments of up to four gasoil cargoes per month, for up to one year, after negotiations with the potential seller. PNOC's tender closed on September 13, but results could not immediately be confirmed Monday.
EXCESS LENGTH WEIGHS ON JET FUEL
Meanwhile, sentiment in the co-distillate jet fuel market weakened, in line with continual weakness in the physical market as buying appetite remained dull approaching the end of peak summer travel season.
In addition, market sources added the region was saddled with ample supply as a closed arbitrage to move barrels from Asia and the Middle East to the west of Suez has trapped surplus barrels in the region.
The front-month October/November timespread for the same period flipped into a contango structure to minus 15 cents/b Thursday on weak fundamentals. This marked a 59-week low for the jet fuel timespread but on Friday, the timespread improved slightly to minus 9 cents/b.
The quarterly Q4/Q1 spreads were also down to plus 44 cents/b Friday, marking a plus 33 cents/b decline from the start of the week.
FOB Singapore cash differentials for physical cargoes fell by 10 cents/b from the start of the week to minus 43 cents/b to Mean of Platts Singapore jet fuel/kerosene assessment on September 12, before rebounding to minus 19 cents/b on Friday.
Market participants were eyeing award details from Qatar Petroleum for the Sale of Petroleum Products, or QPSPP's tender to supply 240,000 mt of Pearl GTL jet fuel for loading from Ras Laffan over October-March, 2019.
Several market observers also noted that results from Bahrain Petroleum Co., or Bapco's could likely set the tone for jet fuel cargo premiums loading from the Arab Gulf region. The refiner is closing a sell tender to supply 40,000-60,000 mt of jet A-1 fuel on September 17. The cargo is slated for loading from Sitra over October 7-10.
