Middle Distillates
Market Overview
Diesel
Singapore diesel cracks surge close to 70$/bbl in symphony with Europe and US diesel cracks that exploded due to a very weak inventory position coupled with multiple unplanned refinery outages, most notably on Jizan and major Russian kits.
The Sep diesel-mogas spread in Singapore has also widened to multi-year highs of 47$/bbl, which would push refineries to maximize any distillates they can at the expense of mogas.
In a VGO-constrained world and when crude availability is at risk, this would mean the VGO is preferentially routed into the HCU instead of the FCC.
Sikka arb is very open to the Med due to extended Jizan outage and carry over impact from past month’s CPC outage.
Weak GO E/W supports the arb to the Rotterdam as well, vs Singapore
Ulsan barrels are also open even to Los Angeles.
Kero
Singapore regrade in prompt months remain below zero, but turns positive from November.
Seasonal stockbuilding for heating in Japan increases kero demand in winter.
Arbs from North East Asia and South East Asia remain open into USWC throughout 2027.
