Flurry of physical deals emerge; traders await Aug cargoes

Asia's middle distillates markets kicked off the week with a flurry of physical cargo trades, with spot discounts dipping further, as the paper and futures market both slipped as a knee-jerk reaction to a decline in crude prices.

ICE gasoil futures turned back into a contango price structure ahead of the contract expiry deadline, which was mirrored on to paper market discussions.

August spot cargoes are likely to be offered in the next few days, one trader said.

Capping weakness, prompt demand for July deliveries remained firm from Indonesia's Pertamina, with one of the refiner's Balikpapan crude units likely to only restart ending July, two trade sources said.

Concerns about how US production will be impacted by hurricane weather conditions, which could limit prompt supplies, were also present, limiting weakness.

Refining margins (GO10SGCKMc1) for the fuel were at a slightly more than two-week low of around $16.80 a barrel, reflecting the weakness in trading sentiment.

Spot discounts (GO10-SIN-DIF) sank to a two-session low, reflecting the strong selling interest in the open trading market and a widening July-August contango price structure.

On the jet fuel front, arbitrage price differences between Asia and the West remained shaky and traders were not overly bullish about the sustainabilty of east-west cargo flows.

Regrade (JETREG10SGMc1) widened back to a discount of around $1.20 a barrel, with spot deals in the open trading window keeping at discounts of slightly more than 20 cents a barrel. (JET-SIN-DIF)

SINGAPORE CASH DEALS

- One gasoil deal, one jet fuel deal

REFINERY NEWS

- Citgo Petroleum Corp began cutting production at its 165,000 barrel-per-day Corpus Christi, Texas, refinery on Saturday ahead of the approach of Hurricane Beryl, said people familiar with plant operations.

- A brief power interruption on Friday night triggered multiple unit malfunctions at Valero Energy Corp's VLO.N 360,000 barrel-per-day (bpd) Port Arthur, Texas refinery, said people familiar with plant operations.

NEWS

- Oil prices slid on Monday after rising for four weeks, as the prospect of a ceasefire deal in Gaza eased geopolitical tensions in the Middle East, while investors assessed potential disruption to U.S. energy supplies from Tropical Storm Beryl.

- The largest ports in Texas closed operations and vessel traffic on Sunday as Hurricane Beryl intensified as it approached the Texas coast near Houston.

- China's June car sales fell 6.9% from a year earlier, extending declines for a third straight month as government incentives failed to spur consumer demand in a sputtering economic recovery.

PRICES