Gasoil cracks dip to two-week low as virus resurgence hits demand


Gasoil demand would come under pressure as industrial activity takes a hit with a second wave of Covid-19 infections in many places, a Singapore-based trader said.

SINGAPORE: Asian refining margins for 10 ppm gasoil slipped to a two-week low on Wednesday, weighed down by concerns over subdued demand in the wake of renewed coronavirus lockdowns, while the region remains awash with supplies.

Refining margins, also known as cracks, for gasoil with 10-ppm sulphur content dropped 35 cents to US$6.24 a barrel over Dubai crude during Asian trading hours, the lowest since the end of June.

Gasoil demand would come under pressure as industrial activity takes a hit with a second wave of Covid-19 infections in many places, a Singapore-based trader said.

“But I think the pick-up in demand, if any, would still be faster than jet fuel, all other things staying equal, ” the trader said.

Jet fuel cracks, which have been the hardest hit among oil products as global airlines struggle to survive their worst downturn, are currently at their weakest seasonal levels for this time of the year.

Refining margins for the aviation fuel in Singapore were down 21 cents at US$1.20 a barrel over Dubai crude on Wednesday.

Cash discounts for jet fuel widened by a cent to 30 cents a barrel to Singapore quotes on Wednesday.

Cash premiums for 10-ppm gasoil dipped to 71 cents a barrel to Singapore quotes, down two cents from a day earlier.

Middle-distillate inventories in the Fujairah Oil Industry Zone climbed 11.8% to 4.3 million barrels in the week ended July 13, data via S&P Global Platts showed.

The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020.

This compared with a weekly average of 2.4 million barrels in 2019, Reuters calculations showed.

Meanwhile, US distillate fuel inventories rose by three million barrels, compared with expectations for a gain of 1.5 million barrels.

This according to data from industry group the American Petroleum Institute (API) showed on Tuesday. — Reuters

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