Singapore — Front-month Singapore gasoil paper timespread saw a steepened contango in the week ended July 13, tracking the recent bearishness in the spot physical market, S&P Global Platts data showed. Singapore June gasoil swaps also saw a 4% dip week on week to $85.10/b Friday.
The Singapore gasoil timespread saw a steepened contango structure at minus 13 cents/b Friday, falling 6 cents/b from the beginning of the week.
Month to date, however, the timespread rose 6 cents/b since the beginning of the month.
As for the flat price, gasoil swaps assessments fell $3.74/b (4.21%) in the week ended 13 July, to be assessed at $85.10/b Friday, the data showed.
Market participants attributed the steepened contango to recent bearishness in the physical spot market, which has been languishing on ample supplies even as demand remains tepid.
Traders attributed the bearishness to higher production levels from refineries returning from turnaround season, and a leaner appetite for gasoil due to the combination of an ongoing fishing ban in the South China Sea as well as the onset of the monsoon season in Southeast Asia and India.
Recent middle distillates inventory data have also born out the glut. S&P Global Platts reported Friday that onshore commercial inventories of middle distillates in the main trading hub of Singapore continued to rise for the sixth consecutive week, according to data released late last week from International Enterprise Singapore.
Total stocks of middle distillates, which include gasoil, jet fuel and kerosene — rose by 2.3% to 9.73 million barrels for the week ended July 11. Middle distillate stockpiles are currently at a 14-week high, with IE’s historical data showing that stocks were last higher over April 5-11, at 11.24 million barrels.
The Asian gasoil swap crack — the spread between front-month 10 ppm sulfur gasoil derivative and front-month Dubai crude derivative — has also been reflecting the weakness seen in the gasoil market. At the Asian close Friday, the gasoil crack stood at $14.02/b, down from $14.58/b seen at the start of the week.
The bearishness could also be seen further along the Singapore gasoil forward curve, where the Q4/Q1 timespread was assessed at 16 cents/b Friday, down $1.49/b from the year-to-date high of $1.65/b on Jan 2, 2018.
Platts margin data reflects the difference between a crude’s netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co.
–Ng Jing Zhi, [email protected]
–Clarice Chiam, [email protected]
–Edited by Norazlina Juma’at, [email protected]
Source: S&P Global Platts
