Asian diesel inter-month price spread narrows as June spot trading begins

⑴ On Tuesday, the structure and spot premium of the Asian diesel market declined compared to the previous trading day. Cargoes loading in the first half of June showed a slight spot premium on an FOB basis. The East-West spread for the June contract narrowed to just under $70 per ton, while shipping sources estimate freight rates on this route at just over $50 per ton.⑵ Refining margins edged up to around $50 per barrel. A deal was struck in the spot price window, with a closing price of $5.35 per barrel. In the Singapore spot market, two diesel trades were completed, with no jet fuel trades reported.⑶ In the fuel oil segment, Asian high sulfur fuel oil continued to decline. The 380cst high sulfur fuel oil crack spread extended its losses and closed Tuesday roughly flat versus Brent crude futures. Ultra-low sulfur fuel oil remained steady, supported by strong spot buying, with the crack spread climbing to a premium of $16.60 per barrel.⑷ For naphtha, concerns over supply from the Strait of Hormuz drove up prices for the second half of June delivery by $36 to $1,064 per ton. The backwardation between spot and futures prices remained at $60 per ton, while refining margins rose to $262.45 per ton. According to an official from a major cracker, some shipments from the UAE have started to arrive gradually, but there is still uncertainty over regular cargo supplies. The gasoline crack spread was about $25 per barrel above Brent crude.