Asia Distillates-Jet fuel refining margins slip as aviation sector struggles


Asian refining margins for jet fuel dipped on Thursday as global airlines have kept most of their grounded to prevent the spread of the coronavirus.

Refining margins or cracks for jet fuel fell on Thursday to $2.29 a barrel over Dubai crude during Asian , down from $2.51 per barrel a day earlier.

Cracks for the aviation fuel are currently over 71% lower than the historical average for this time of the year in the last 12 years, Refinitiv Eikon data showed.

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Global airlines have grounded flights on international as well as domestic routes as countries around the world try to contain the pandemic, which has killed more than 21,000 people.

The International Air Transport Association (IATA) said on Thursday it has written to the heads of government of 18 countries in the Asia-Pacific region, appealing for emergency support to airlines due to the loss in air travel demand from the outbreak.

The states include Bangladesh, , Japan, Malaysia, Pakistan, Philippines, Republic of Korea, and Vietnam, IATA said.

“Airlines are fighting for survival in every corner of the world. Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger ,” IATA Chief Executive Alexandre de Juniac said in a statement.

“There is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity from shuttering the industry.”

Cash discounts for jet fuel JET-SIN-DIF widened to $2.45 per barrel to quotes on Thursday, the widest since November 2008. They were at a discount of $2.28 per barrel on Wednesday.

Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF also widened their discounts to 40 cents per barrel to Singapore quotes on Thursday, compared with a 31-cent discount in the previous session.

Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content inched lower to $10.17 per barrel over Dubai crude on Thursday, from $10.26 per barrel on Wednesday.

The regrade, the price spread between jet and gasoil, for April stood at minus $7.18 per barrel on Thursday, compared minus $7.05 on Wednesday.

– Singapore onshore middle distillate stocks rose 6.5% to a six-month high of 13.1 million barrels in the week ended March 25, Enterprise Singapore data showed.

– Weekly middle distillate inventories have averaged 11.3 million barrels so far in 2020, compared with 11.1 million barrels in 2019, Reuters calculations showed.

– Overall, onshore middle distillate inventories were 15.2% higher year-on-year.

– U.S. stockpiles rose last week, but one-week demand for fuels showed its biggest drop since December in the first inkling that the coronavirus pandemic is denting the country’s energy demand.

– Distillate stockpiles, which include diesel and heating oil, fell by 679,000 barrels in the week to 124.4 million barrels, versus expectations for a 1.9 million-barrel drop.

– No jet fuel trades, no gasoil deals

– Oil prices fell on Thursday following three days of gains, with the prospect of rapidly dwindling demand due to coronavirus travel bans and lockdowns offsetting hopes a U.S. $2 trillion emergency stimulus will shore up economic activity.

– From Canada and the Caribbean to the Baltic and Singapore, oil tanks around the world are filling fast, despite a 50%-100% jump in lease costs, as and scramble to park unwanted crude and refined products.
Source: Reuters (Reporting by Koustav Samanta; Editing by Sherry Jacob-Phillips)
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