Spot product prices were mixed in the week to March 22, with light distillates strengthening but middle distillates and fuel oil pulling back. Gasoline prompt prices have now risen for seven straight weeks. Gasoil and jet fuel sentiment was bolstered by tightening inventories and firm demand amid refinery turnarounds, but spot prices posted marginal declines and cracks slipped due to higher crude costs. Singaporean stocks of middle distillates skidded for the second straight week, settling at the lowest level in more than three months. Diesel demand in India was particularly strong, and buying interest from the country's refiners was expected to rise in the coming weeks and months as a number of facilities will be shut down for upgrade work in preparation for stricter fuel quality standards. Indian state refiners will be required to produce Euro-6-compliant fuels from Jan. 2020. Furthermore, the Indian government is heavily investing in infrastructure projects ahead of die April-May general elections, and infrastructure work typically boosts diesel consumption. And all this is against a backdrop of firm, long-term demand growth. “Stronger domestic demand together with heavy planned refinery works in India through July have led to a rise in spot tenders for both gasoline and diesel to ease tightness in local markets,” stated consultancy Energy Aspects. Jet fuel margins skidded to multi-month lows early in the period, due in part to rising crude costs. Although overall jet fuel demand in the region has remained firm, and growth is expected, rising refining capacity in Asia this year is keeping a lid on the market, traders noted, especially since coming off of a weak winter heating fuel season, which had put downward pressure on jet fuel/kerosene fundamentals. “I will not say it's impossible for the jet fuel cash differentials to flip back to premiums, but it'll be very hard to sustain at the moment,” a trader noted on Wednesday, when differentials were at a 37￠/bbl discount.
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