The front-month November/December Singapore gasoil timespread soared to a 59-month high Friday, tracking an uptrend in the regional Asian physical market amid firm fundamentals, industry sources said Monday.
The front-month November Singapore gasoil timespread crossed the $1/b threshold and jumped 26 cents/b day on day to $1.16/b at the Asian close Friday, a year-to-date as well as 59-month high, S&P Global Platts data showed. The timespread was last assessed higher at $1.38/b on November 29, 2013, Platts data showed.
A backwardated market structure means that gasoil is able to command higher prices at the prompt
For the outright price, the Singapore November gasoil swap rose $1.15/b day on day to $93.55 cents/b Friday.
Bullish sentiment was also seen further down the curve, with the Singapore gasoil Q1/Q2 spread jumping 6 cents/b day on day to 17 cents/b.
On the physical front, the Asian gasoil market has been on an uptrend as the region's insatiable appetite for the middle distillate outstrips available supply.
The cash differential for the benchmark FOB 10 ppm sulfur gasoil grade has posted a series of fresh year-to-date highs over the past two weeks, peaking at plus $1.88/b to the Mean of Platts Singapore Gasoil assessments. At the Asian close Friday, the cash differential for the benchmark ultra-low sulfur diesel grade was assessed at plus $1.84/b to MOPS Gasoil assessments, FOB, steaming off just 4 cents/b from Thursday.
The strength in the Asian gasoil market has come amid fierce buying appetite against a backdrop of continuing tight supply on the back of ongoing and impending turnarounds at regional refineries.
In addition, Asian market participants said last week that gasoil demand in certain sectors into North Asia such as the fishing, barge and high seas industries was holding firm. Adding to the bullish sentiment was supportive fundamentals from China, where traders said domestic gasoil demand remained robust, while gasoil exports continued to be seen hovering on the low side.
Platts reported last week that China's gasoil exports in September hit a multi-month low amid strong domestic demand and tight quotas. Gasoil exports were down 13.1% year on year at a 20-month low of 1.03 million mt, the lowest since January 2017 data from the General Administration of Customs showed. This brought China's gasoil exports over January-September to 14.29 million mt, up 18.9% year on year.
Demand for gasoil has rebounded since mid-August as autumn is the typical peak season for harvesting, fishing, construction, mining and travel, market sources said last week.
"Beijing resumed massive infrastructure projects to stimulate the economy in H2, amplifying the demand rebound for gasoil," a Beijing-based analyst said.
