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Traded oil futures on Japan's TOCOM dip 2% on month in July, slide 47% on year

Increase font size  Decrease font size Date:2019-08-08   Views:62
Traded oil futures on the Tokyo Commodity Exchange dipped 2.22% month on month to 244,825 trades in July, and slid 46.87% year on year, latest TOCOM data showed Tuesday.

Traded Dubai crude oil contracts fell 2.79% on month to 214,518 trades in July and were down 45.73% on year, TOCOM data showed.
Total traded gasoline contracts fell 19.61% on month to 17,374 trades in July and plunged 66.51% on year, the data showed.

Despite this, the Asian gasoline market was generally firmer in July, bolstered by refinery outages in the US, the Middle East and Asia.

The strength was seen in higher octane grades in particular as barrels of octane boosters were drawn to the US in the month, leading to continuing tightness in the availability of blendstocks such as reformate and toluene in Asia. The 95/92 inter-RON spread hit a near 16-month high of $3.51/b Tuesday as a result. The spread was last wider on April 13, 2018 at $3.53/b.

In the middle distillate segment, kerosene contracts on TOCOM spiked 72.22% on month to 10,004 trades in July, while cash settled barge gasoil and kerosene contracts each rose 10% on month to 264 trades. Cash-settled lorry gasoil and kerosene contracts rose 15% and 10.42% on month to 276 and 265 trades, respectively.

The North Asian jet fuel/kerosene spot market saw strength in July, largely on the back of a wide-open arbitrage window to the US West Coast.

This led FOB Korea cash differentials to a year-to-date high of minus 10 cents/b on July 25. It was last assessed higher at MOPS minus 5 cents/b on November 16 last year, according to S&P Global Platts data.

However, market participants do not expect this momentum to continue for much longer, as the trans-Pacific arbitrage window has since shut.

Some market participants are also concerned that ongoing Japan-South Korea tensions could have a material impact on the North Asian spot market in coming months. Japanese companies now have to apply for a license to export cargoes to South Korea, a move that could affect the country's exports to South Korea.

While jet/kerosene comprised the smallest volume of oil products traded at just 6.2% of the 3.22 million kl Japan exported to South Korea in 2018, market sources said this could disrupt companies looking to move kerosene into tank storage in South Korea in summer ahead of the winter demand season.

Traders were also wary of the impact that retaliatory measures from the South Korean government would have on the flow of distillates in Northeast Asia. "South Korea definitely exports more oil products to Japan, so that would have a huge impact on product flows," a trader in Singapore said.

TOCOM provides futures and options trading in oil, precious metals and agriculture.

All oil futures contracts are physically delivered except for the Dubai crude and barge- and lorry-delivered contracts, which are cash settled.
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