Asian refining margins for 10 ppm gasoil rose to their strongest level in two months on Monday as feedstock crude prices fell, but traders were concerned higher supplies emerging from India would likely weigh on the market in the coming months.
Widespread COVID-19 lockdowns in India are expected to dent its domestic fuel demand this month, resulting in higher product exports from the country, market watchers said. India on Monday reported more than 300,000 new coronavirus cases for a twelfth straight day, while a leading Indian industry body urged authorities to take the “strongest national steps” and to curtail economic activity to save lives on Sunday.
Refining margins for 10 ppm gasoil climbed 28 cents to $7.53 per barrel over Dubai crude during Asian trading hours, a level not seen since March 3. Regional refineries, returning from seasonal maintenance, would also add to existing supplies, while scopes for arbitrage shipments to the West remain limited with Europe struggling to clear its supply overhang, trade sources said.
Cash discounts for 10 ppm gasoil GO10-SIN-DIF widened to 19 cents per barrel to Singapore quotes, while the May/June time spread for the industrial fuel grade in Singapore widened its contango structure to trade at minus 10 cents per barrel on Monday.