The Asian middle distillates complex is expected to hold largely steady in the week starting Nov. 30 with regional supply seen especially tight due to lower refinery run rates amid poor refining margins, even as the upside continues to be limited due to the coronavirus pandemic.
ICE January Brent crude futures were up 15 cents/b at $47.73/b at 0300 GMT Nov. 30 from the $47.58/b at 0830 GMT Asian close on Nov. 27.
JET FUEL/KEROSENE
** The jet fuel/kerosene market was a tad lower in mid-morning trade Nov. 30 from the previous session. Brokers pegged the front month December-January jet fuel timespread at minus 37 cents/b at 0300 GMT, widening 1 cent/b from the 0830 GMT Asian close on Nov. 27.
** Japan's demand for kerosene slowed by 3% year on year to 274,655 b/d in November, after experiencing warm weather but the recent revision in temperature forecast has raised expectations of a rebound in consumption in December.
** Temperatures in Hokkaido in northern Japan are to fall below the 30-year average over Nov. 28-Dec. 27, according to the latest weather outlook from the Japan Meteorological Agency Nov. 25.
** The Asian aviation sector was pretty ranged-bound in the week, and the FOB Singapore jet fuel/kerosene cash differential inched up by 1 cent/b week on week to minus 27 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Nov. 27, Platts data showed.
** Also reflecting the gradual uptick in sentiment, the Q1/Q2 quarterly jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus $1.29/b for the week ended Nov. 27, up from the prior week's average of minus $1.33/b.
GASOIL
** The December-January gasoil market structure stood at minus 15 cents/b at 0300 GMT, narrowing slightly from minus 16 cents/b at the Asian close Nov. 27, Platts data showed.
** The December Exchange of Futures for Swaps spread was pegged at plus $2.25/mt at 0300 GMT, widening from plus $1.77/mt at the Asian close Nov. 27.
** The Asian gasoil market may remain steady to slightly firmer over the week starting Nov. 30, with market participants saying that the product has been moving within a narrow range amid little change in demand and supply fundamentals.
** But more regional refinery outages, as well as a steady flow of newbuild VLCCs moving Asian gasoil barrels to the West may lend some upward support to the complex. In a report published late Nov. 27, S&P Global Platts Analytics said recently announced refinery unit shutdowns in Taiwan from refiners Formosa Petrochemical Corp. as well as CPC Corp. may further tighten regional gasoil supply.
** Reflecting the improved sentiment, the Q1/Q2 quarterly gasoil swap spread – an indication of near-term sentiment -- averaged minus 88 cents/b for the week ended Nov. 27, up from the prior week's average of minus $1.01/b.
