Gasoil

Singapore afternoon online window trade yielded three deals. Brightoil picked up two high-sulphur gasoil cargoes at Mops +$0.25/bl and at a premium of $0.40/bl to the average of 27 June-3 July quotes. A third deal saw a 0.001pc ultra-low sulphur gasoil cargo done at Mops +$3.65/bl, up from the previous deal done last Friday at a $3.50/bl premium to the average of 26 June-2 July quotes.

Indonesia’s state-controlled importer Pertamina is locked in negotiations with term suppliers to buy gasoil for third-quarter delivery via Petral, its trading arm. It is likely to secure an average of one 600,000 bl cargo of 0.35pc sulphur gasoil each month from July-December from Malaysia’s Petronas, similar to its monthly intake for the current quarter. It also bought an optional 200,000 bl cargo each month for the existing quarter. Cargoes of 600,000 bl were done at premiums of around $0.80/bl to its pricing formula on a cfr Balongan/Situbondo basis for the second quarter, while 200,000 bl cargoes were booked at a premium of $1.70/bl. Negotiations are likely to be finalised by the end of the week. Potential suppliers are thought to be confined to only refiners and national oil companies, excluding traders, in line with a new policy encouraged by the Indonesian parliament.

China’s economic agency NDRC cut domestic diesel prices by 510 yuan/t effective 9 June to reflect recent declines in global oil prices. This came after a Yn310/t price cut in May. Beijing follows a price mechanism in which domestic fuel prices are adjusted when a basket of crude values moves by more than 4pc over a period of 22 working days. It remains to be seen if the price cut will stimulate subdued domestic demand domestically that has been dampened by the annual fishing ban in the South China Sea that started in mid-May and a slowing economy.

But planned and unplanned refinery shutdowns in Asia-Pacific are helping keep gasoil demand firm and supporting prices for most grades, with spot Singapore premiums of ultra-low sulphur gasoil at a six-month high.

Steady Australian demand for ultra-low sulphur gasoil is absorbing some regional supply and helping counter a lack of viable arbitrage outlets in Europe or the US west coast. Shell will cease operations at its 79,000 b/d Clyde refinery in Australia from 30 September, with the refinery to be converted to an import terminal. Shell Australia is a major importer of ultra-low sulphur gasoil and clean products from Singapore, South Korea and Japan, with its refineries in the country struggling with poor margins and intense competition from other more advanced refineries in Asia. Around 830,417 bl of diesel was shipped from Singapore to Australia in the week ended 6 June, notably higher than exports at around 319,000 bl seen during same period a month earlier.

Indian state-controlled refiner IOC is in the market to buy two 60,000t cargoes of 0.032pc sulphur gasoil for 28-30 June and 7-9 July delivery on a Chennai/Haldia/Paradip basis. It last week bought 60,000t of the same grade of gasoil at a premium of around $7/bl to its pricing formula on a cfr Chennai/Paradip/Vizag basis. The cargo was likely bought from PetroChina for 19-21 June delivery. IOC’s import demand comes despite the onset of the monsoon season, when increased hydropower production usually curbs diesel use. But disruptions and upcoming maintenance at its 210,000 b/d Chennai refinery have probably spurred import demand.

Sri Lanka’s state-controlled refiner Ceylon Petroleum (Ceypetco) is seeking to buy 300,000 bl of 0.25pc sulphur gasoil through spot tenders for early-July delivery, having just bought around 380,000 bl of the same medium-sulphur grade gasoil for second-half June delivery. Steady imports from Ceypetco are mostly to cover a domestic shortfall ahead of scheduled maintenance at its 50,000 b/d Kelaniya refinery for about 40-45 days starting in July.

Singapore balance-month June gasoil paper swaps were valued at $113.05/bl at the market’s close, rising by $2.75/bl from last Friday. The June-July intermonth time spread widened by a slight $0.05/bl to a $0.25/bl backwardation. Asia’s gasoil crack spread, or its premium relative to Dubai crude for July, eased to $15.33/bl from the previous $15.62/bl.