| RSS
Business center
Office
Post trade leads
Post
Rank promotion
Ranking
 
You are at: Home » News » internal »

India, Persian Gulf gasoil may head West amid faltering Asian demand

Increase font size  Decrease font size Date:2018-11-06   Views:601
Traders were eyeing Western buyers for gasoil loading from India and the Persian Gulf amid faltering Asian demand, which led to the middle distillate prices tumbling this week.

Gasoil traders said this week that while the Asian gasoil market was weakening, the European market has been getting stronger, leading to a deepening divide between the two regions. The divergent pricing has opened arbitrage opportunities from East to West.
At the Asian close Thursday, the front-month gasoil Exchange of Futures for Swaps was minus $17.69/mt, down $1.03/mt from Wednesday. The EFS is the difference between Singapore front-month 10 ppm gasoil swaps and ICE low sulfur gasoil futures. The spread measures the difference between the Asian and European gasoil markets.

Traders have said previously that to move gasoil from Asia to Europe, the EFS typically needs to be around minus $10-$15/mt or lower.

"We should see from here on, at the prompt, some vessels pointing to the West ... but not from the Asian side, more from AG and West Coast India -- those will start to point West first, and [these barrels] won't come to the Far East anymore," a trader said Thursday.

"I see a couple of cargoes pointing West, from West Coast India," a trader said Wednesday. "With demand in the east looking as though it will taper off, I think more additional volumes will have to head West."

The Asian gasoil market has come under pressure from additional supply volumes expected from China, which are arriving even as the demand outlook has turned bleaker.

The bearish sentiment marks a drastic reversal for the Asian benchmark gasoil grade, which just a week ago was still being hailed as a product with a robust outlook for the rest of the year.

However, traders said this week that the outlook for the middle distillate began darkening late last Friday when China released a third batch of oil product export quotas for the year.

While some sources said earlier that the gasoil portion at 590,000 mt was just over 20% of the new allocation and so would have little impact on the market, other traders said this was an underestimation.

High sea gasoil demand, the main factor underpinning the strength in the Asian gasoil market, was weaker, according to sources, although this could not be confirmed. In addition, China's domestic demand for gasoil could be waning as well as the harvesting season comes to an end.

"Asian demand is looking weaker for the rest of the year ... Taiwan demand is slower now than before, and Australian gasoil demand is still steady, but it tends to draw down on stocks towards the end of the year," a trader said Thursday, adding that most companies tend to try to keep inventories low at the end of the year for financial reporting purposes.

"It seems demand has slowed down a bit and we can see more cargoes offered in the market. About one or two weeks ago, cargoes could quickly find homes when they were shown to the market, but these past several days, there are still barrels around looking for homes," another trader said.

It was 10 ppm and 500 ppm sulfur gasoil cargoes that were still searching for outlets, he added.

At the Asian close Thursday, the FOB Singapore 10 ppm cash differential was assessed at plus 56 cents/b to the Mean of Platts Singapore gasoil assessment, down 4 cents/b from Wednesday. Just a week ago, the FOB Singapore cash differential had been assessed at plus $1.88/b to MOPS Gasoil assessments.

The bearish sentiment was mirrored on the derivatives front, with the front-month December/January Singapore gasoil timespread falling 21 cents/b day on day to be assessed at plus 36 cents/b at the Asian close Thursday.

This marked the fourth consecutive decline from the year-to-date high on October 26, when the time spread was assessed at plus $1.16/b, Platts data showed.

The Q1/Q2 quarterly spread, however, rose 7 cents/b day on day to be assessed at plus 16 cents/b Thursday, Platts data showed.

On cracks, the front-month November Singapore gasoil/Brent crack -- which measures the relative value of the product to crude oil -- was assessed flat day on day at $16.21/b at Asian close on Thursday. This was down 74 cents/b from the year-to-date high of $16.95/b on October 26, according to Platts data.

Some traders, however, said this week that Asian gasoil demand remained firm.

"It is still strong, but it's just not as strong as before ... sentiment changed very quickly," a source said Thursday, adding that with the regrade still stuck in negative terrain, refiners would continue to prefer producing gasoil instead of jet fuel.

Market participants also pointed out that the gasoil crack spread to crude, a measure of the relative strength of a product against the crude it is produced from, was still high.

At the 0830 GMT Asian close Thursday, the FOB Singapore 10 ppm sulfur gasoil crack against front-month cash Dubai crude stood at $18.68/b, up 69 cents/b from Wednesday.

Just a week ago, the gasoil/Dubai crack spread was assessed at $19.89/b on October 26, a near four-year high. Platts data showed that the crack spread was last higher on September 27, 2014, at $19.99/b.
 
 
[ Search ]  [ ]  [ Email ]  [ Print ]  [ Close ]  [ Top ]

 
Total:0comment(s) [View All]  Related comment

 
Recomment
Popular
 
 
Home | About | Service | copyright | agreement | contact | about | SiteMap | Links | GuestBook | Ads service | 京ICP 68975478-1
Tel:+86-10-68645975           Fax:+86-10-68645973
E-mail:yaoshang68@163.com     QQ:1483838028