Singapore -- Asian refining
margins for 10 ppm gasoil rose
on Friday, posting their eighth
consecutive weekly gain, as a
rebound in manufacturing activity
in the region has bolstered
industrial demand for the fuel.
Revived transportation and
industrial activity in China and
India since September has helped
boost the gasoil market sentiment.
Refining margins, also known as cracks, for 10 ppm gasoil
rose 9 cents to $6.51 a barrel over Dubai crude during Asian
trading hours, their highest level since July 30.
Cracks for the benchmark gasoil grade in Singapore have gained
nearly 8% this week, Refinitiv Eikon data showed.
Some refiners have been blending jet fuel into the gasoil
complex, but they are no longer doing that, which might help
tighten some of the gasoil supplies, market watchers said.
Asia Distillates-Gasoil stays firm on U.S., Singapore stock drawdowns
"The overlapping revival in regional air travel and seasonally higher demand for kerosene
for domestic heating in Korea and Japan has tightened
regional diesel supplies as jet molecules are withdrawn from
the diesel pool," consultancy Energy Aspects said in a note.
But the gasoil cracks would likely continue to face some
headwinds in the short-term as refiners are expected to
boost output heading into 2021, and the East-West gasoil
arbitrage window remains shut.
Gasoil flows from the East to West are not likely to pick up
before the second quarter of 2021, analysts at Energy
The exchange of futures for swaps (EFS), which determines
the gasoil price spread between Singapore and Northwest
Europe, traded at minus $7.69 per tonne on Friday, which
typically makes it unworkable for arbitrage shipments.
Arbitrage is usually profitable when the EFS trades at about
minus $15 a tonne or below, though it also depends on other
factors such as freight rates, according to traders.