Asia’s middle distillates markets are witnessing thinning liquidity amidst limited discussions while traders await Chinese offers. April diesel exports from China are estimated at 400,000 metric tons, and jet fuel at approximately 2.2 million tons. Refining margins have declined, cash differentials have narrowed, and geopolitical factors are influencing oil prices upward.
Liquidity in Asia’s middle distillates markets is currently experiencing a decline as discussions remain scarce following a recent surge in trading. The east-west pricing remains tight, although ICE gasoil futures have shown an upward trend. Traders are attentively anticipating new offers from Chinese refiners as we progress past the mid-month mark, signaling the onset of April sales activity.
Export assessments for diesel originating from China for April are projected to remain consistent at approximately 400,000 metric tons, while total jet fuel volumes are expected to reach about 2.2 million tons. Refining margins have declined for the second consecutive day, now hovering around $13.30 per barrel, in light of a recent rebound in crude prices.
Market activity remains subdued, particularly for 10ppm sulphur gasoil, which has seen a lack of bids. Cash differentials concluded trading at three cents lower, reflecting a tighter backwardation in the April-May paper time spreads. Additionally, the arbitrage spread between jet fuel in Asia and the U.S. West Coast has considerably widened, suggesting potential forthcoming discussions fueled by profitability prospects.
Despite the rise in spreads, the regrade for April jet fuel remains roughly unchanged at a discount of around $1.2 per barrel. There were no cash deals reported for either fuel type during this trading session. Meanwhile, U.S. crude oil inventories are anticipated to have increased, while distillate and gasoline stocks likely experienced reductions, as indicated by a preliminary Reuters survey.
In related news, damage occurred to one tank of jet fuel due to an incident involving a U.S. military-contracted tanker. Furthermore, Venezuela’s PDVSA is preparing three operational strategies to ensure continuous production and export activities in collaboration with Chevron despite an impending license expiration. In corporate developments, Chevron acquired approximately 4.99% of Hess Corporation’s shares, demonstrating confidence in its acquisition objectives.
Internationally, oil prices increased by over 1%, reaching their highest levels this month amid geopolitical tensions and China’s economic stimulus intentions. The Yemeni militant group, the Houthis, has declared that they will continue their actions against Israeli shipping in the Red Sea, undeterred by external pressures.
In summary, the current state of Asia’s middle distillates markets is characterized by reduced liquidity and anticipation of forthcoming offers from Chinese refiners. Refining margins are declining, while trade discussions increase amidst a widening arbitrage for jet fuel. External factors such as geopolitical instability and company actions further influence the market dynamics, with U.S. inventory trends also drawing attention.
Original Source: www.tradingview.com
