Asia diesel margins rebound on tight supplies, robust Europe demand

In Asia


SINGAPORE Oct 7 (Reuters) – Asian refiners’ margins from producing 10ppm gasoil rebounded more than 40% on Friday from a week ago as supplies fell during seasonal refinery maintenance, while traders focused on robust demand in Europe, industry sources and analysts said.

Europe is importing more diesel amid heavy refinery maintenance and a workers strike at refineries in France, they said. The region’s strong demand is expected to last throughout winter as some users are switching to oil from gas after Moscow cut supplies to Europe while the European Union will ban seaborne Russian oil products imports next February.

Refining margins for the benchmark gasoil grade in Asia rose to $45.10 per barrel over Dubai crude on Friday’s market close, rebounding from $32.00 last week.

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“Gasoil cracks have strengthened due to the extensive refinery maintenance occurring in Europe at the moment, exacerbated by the French refinery strikes which are tightening European refinery supply,” said Mark Williams, a research director at consultancy Wood Mackenzie.

Refiners’ margins were hit last week amid expectations of a big boost in Chinese exports after Beijing issued the largest batch of oil products export quota this year. However, some expect Chinese diesel exports to ramp up from November and into 2023 as domestic demand is currently strong. read more

“Demand-supply fundamentals will likely remain strong in Q4 as China’s oil products production is still focused on gasoline and naphtha, with excess gasoil volumes to be used up domestically,” said KY Lin, the spokesperson from Taiwanese refiner Formosa Petrochemical Corp (6505.TW), one of Asia’s largest refined products exporter.

“Europe’s supply issues will support performance further,” he added.

South Korea, a leading oil products exporter, has ramped up diesel exports to the West for the past five months, hitting a new of high of 367,000 tonnes in September, according to Refinitiv Oil Research.

However, Asia’s gasoil exports for September fell by more than 9% month-on-month and are down more than 14% year-on-year, Refinitiv said, because of some refinery maintenances.

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Reporting by Trixie Sher Li Yap and Matthew Chye; editing by Uttaresh.V

Our Standards: The Thomson Reuters Trust Principles.



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