Spot product prices slid in the week to Aug. 21 as inventories remained ample, demand was mostly weak, and international crude prices went on a down swing. Gasoil and jet fuel prices crept down amid glutted inventories, but differentials and margins improved on traders' expectations of reduced production from Sept. as a number of Asian refiners plan to commence seasonal turnarounds. The gasoil differential rose to a high not seen in over one month. Malaysian suppliers were seen in the prompt market seeking barrels ahead of refinery maintenance scheduled for Oct. and Nov. Also underpinning the gasoil and jet fuel markets were sharp declines in weekly Singaporean stocks, in which middle distillate inventories dropped by 8% to a six-week low. In addition to refinery turnarounds, rising diesel consumption in India could reduce the country's exports and result in tightening supplies going forward. In India, "Diesel retail prices were cut again.. .[to] the lowest level in almost three years," stated analysts with JBC Energy. "On the other hand, a weaker-than-expected monsoon season has prompted the government to offer diesel subsidies for farmers in agricultural areas, which could also provide a short-term boost." Furthermore, diesel shipments to Australia are on the rise and could soak up excess barrels, due to recent refinery closures in Australia. During HI 2015, Australia has imported an average of 280K b/d of diesel, up 40K b/d on the year, JBC Energy reported. "In previous years, Australian diesel demand climbed steadily between July and Nov., which should underpin Australia's role as an importer going forward," according to JBC. Meanwhile, jet fuel differentials could soon be buoyed by refiners' shift to kerosene production, in lieu of aviation fuel output. Market sources noted that refiners in Japan and South Korean have begun building up kerosene stocks ahead of turnarounds and winter demand for the heating fuel.
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