Singapore — Demand concerns are expected to take center stage in the Asian middle distillates complex as a resurgence of coronavirus infections around the region is expected to suppress buying appetites, exerting downward pressure on sentiment. Persistent supply tightness, however, is likely to provide a floor for prices, industry sources said Aug. 3.
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Register NowOctober ICE Brent crude futures slipped to $43.27/b at 0300 GMT Aug. 3, 44 cents/b lower from $43.71/b at the 0830 GMT Asian close on July 30.
JET FUEL/KEROSENE
** The balance month August/September Singapore jet fuel timespread was pegged at minus 45 cents/b at 0300 GMT Aug. 3, widening 2 cents/b from minus 43 cents/b on July 30.
** The Asian jet fuel/kerosene market remained in the doldrums and demand for aviation fuels is tepid amid the resurgence of the coronavirus pandemic, and as world governments call for the re-imposition of strict border controls.
** On July 31, Philippine president Rodrigo Duterte extended restrictions in the country's capital until mid-August amid a surge in local infections. In Southeast Asia, the Philippines has logged the second-highest number of COVID-19 infections, after Indonesia, since tough lockdown measures were eased in June, the Al-Jazeera news network reported.
** The resurgence of COVID-19 has dented air travel demand and capped aviation fuel prices. As a result, the FOB Singapore jet fuel/kerosene cash differential remained in discounts of 43 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on July 30, Platts data showed.
** Further along the forward curve, the Q4 2020/Q1 2021 jet fuel/kerosene spread widened 17 cents/b on the week to minus $2.31/b July 30. Platts data showed.
** Looking ahead, market sources maintained a bleak outlook for the Asian aviation sector, while the International Air Transport Association reported on July 28 that global passenger traffic will not return to pre-COVID-19 levels until 2024 amid slow containment of the virus, reduced corporate travel and weak consumer confidence.
GASOIL
** The backwardation in the Singapore balance month August/September structure was valued at plus 1 cent/b at 0300 GMT Aug. 3, down from plus 6 cents/b at the July 30 Asian close.
** The balance month August Exchange of Futures for Swaps spread was pegged at minus $1.25/mt at 0300 GMT Aug. 3, narrowing from minus $3.61/mt at the July 30 Asian close.
** Volatility in the Asian gasoil market has stoked uncertainty among market participants, with traders offering mixed opinions as to the outlook for gasoil over August.
** Some traders have said that sentiment in the Asian gasoil market may soften in August amid expectations of higher export volumes from the major supply centers of Northeast Asia, especially from China.
** In addition, demand concerns have also grown amid a resurgence in the number of locally transmitted cases of COVID-19 reported around the region, with the virus again taking hold in countries which had early success in stamping out the disease and bringing it under control. Over the weekend, it was reported that cities in Australia and Vietnam have experienced a surge in infections, with both cities acting swiftly to impose travel restrictions and social distancing measures in a bid to curb the spread of the virus.
** Still, other Asian traders have said that gasoil fundamentals may prove resilient, given sharply lower refinery run rates in Northeast Asian countries, which have worked to limit supply.
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August 03, 2020 at 11:08AM
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Asia middle distillates - Key market indicators this week - S&P Global
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