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Singapore gasoil swaps surge to a 41-month high on strong crude complex

Increase font size  Decrease font size Date:2018-05-11   Views:607
Front-month Singapore gasoil swaps spiked late Wednesday, tracking the rise in the upstream crude oil marker.

Singapore June gasoil swaps rose $1.64/b day on day to be assessed at a 41-month high of $89.27/b at Wednesday's Asian close.

The last time gasoil swaps was assessed higher was on November 27, 2014 when it stood at $90.15/b, S&P Global Platts data showed.

Market participants attributed the spike to firmer crude prices due to US withdrawing from the Iran nuclear deal.

President Donald Trump announced Tuesday the US would restore sanctions on Iran that were lifted under the Joint Comprehensive Plan of Action.

It is unclear what impact that decision will have on Iranian crude exports, with estimates ranging from a decline of 200,000 b/d to 1 million b/d.

Meanwhile, OPEC's assurance on their continual commitment to the existing supply cut deal further boosted crude oil values.

UAE Energy Minister Suhail al-Mazrouei on Tuesday indicated OPEC would remain committed to its production cuts. "Working collaboratively with our partners, our joint efforts to re-balance the oil market and bring investment back into our industry are progressing well," he said.

Weekly inventory data showing across-the-board stock draws was also supportive.

Energy Information Administration data released Wednesday showing larger-than-expected draws in crude, gasoline and distillate stocks.

Crude inventories fell 2.197 million barrels last week to 433.758 million barrels the week that ended May 4, a 2.1% deficit to the five-year average.

Analysts S&P Global Platts surveyed Monday expected stocks fell by 400,000 barrels last week.

On the physical front, the Asian gasoil market was balanced, but sentiment mixed.

While demand was strong in the Persian Gulf and India, some cargoes were seen heading to Singapore as a high exchange of futures for swaps kept the arbitrage from East of Suez to the West shut.

Meanwhile, regional refineries in Asia were gradually returning from maintenance. With strong gasoil margins, distillate runs were likely to be high.

"Refineries are maximizing distillates through summer," a trader said.

However, this may be absorbed by the market, given low global distillate inventories, market sources said.
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