ASIA MIDDLE DISTILLATES: Key market indicators for July 25-29

Asian middle distillate market focus remains on supply concerns for the July 25-29 trading week as rising availabilities coupled with fickle arbitrage economics lead to more barrels being seen stuck within the region.

Front-month September ICE Brent crude oil futures stood at $102.65/b at 10 am Singapore time (0200 GMT) July 25, down $1.25/b (1.2%) from the 0830 GMT Singapore close on July 22.

Jet fuel/kerosene

** The near-term outlook for the Asian jet fuel/kerosene market may moderate over July 25-29, with industry sources saying that regional refiners have continued to maintain high production of middle distillates on the back of lucrative margins even as Asian jet fuel demand remains largely steady.

** Market participants are keeping a keen eye on China's jet fuel exports, with some estimating that August outflows could be as high as 700,000-800,000 mt, while other say improving domestic demand could trim that number to as low as 600,000 mt. China's jet fuel exports for July are currently estimated at 600,000-650,000 mt, after General Administration of Customs data released July 18 showed June jet fuel exports totaled 520,000 mt, a 16-month low.

** Brokers pegged the front-month August-September jet fuel/kerosene time spread at plus $1.35/b at 0200 GMT July 25, narrowing from plus $1.47/b at the July 22 Asian close, S&P Global Commodity Insights data showed.

** Platts assessed FOB Singapore jet fuel/kerosene cash differential at plus 9 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments July 22, unchanged from the start of the week, S&P Global data showed.

** The Q3-Q4 jet fuel/kerosene swap spread averaged plus $8.52/b over July 18-22, down from plus $9.93/b the week before.

Gasoil

** The Asian gasoil complex is likely to see a sustained easing of supply tightness over the coming week amid increasing outflows from net exporting countries to capture attractive gasoil cracks, placing downward pressure on near-term sentiment, market sources said.

** Sell-side tender activity from South Korea has been strong, while Japan is also stepping up exports after its refinery maintenance season, sources said. Asian refinery downtime decreased by a significant 830,000 b/d to 1.51 million b/d for the week ending July 22, with major turnarounds in the Middle East, South Asia, China and Japan having ended, according to Platts Analytics July 21.

** Brokers pegged the front-month August-September Singapore gasoil spread at plus $2.15/b at 0200 GMT July 25, down 20 cents/b from the Asian close July 22 at plus $2.35/b.

** The August EFS spread was pegged at minus $35.75/mt at 0200 GMT July 25, down $1.15/mt from the July 22 close.

** Singapore's onshore commercial middle distillate stocks rose 5.92% week on week to 8.07 million barrels over July 14-20, Enterprise Singapore data released late July 21 showed, rebounding to a four-week high amid increasing supply availability.

** Singapore maintained its position as a net exporter of gasoil over July 14-20, with outflows of 397,754 mt outpacing inflows of 175,302 mt by over twofold, the Enterprise Singapore data showed.

** The Q3-Q4 gasoil swap spread averaged plus $9.48/b July 18-22, easing from plus $10.78/b the week before.