【Ferro-alloys.com】Cash premiums for February 2022 loading barrels of Vietnamese and Malaysian sweet crudes could trend lower on the month amid a bearish sentiment coupled with weaker middle distillate product cracks, according to market sources Dec. 16.

A flurry of spot tenders from Vietnam's state-owned PetroVietnam Oil was seen with Chim Sao, Ruby and Rang Dong crudes available for February 2022 loading, as traders awaited clarity on results in the coming days.

"Slightly bearish [sentiment for regional crudes] compared to last month, mainly due to narrower backwardation structure. Omicron variant will affect West more, not so much of our region and demand is still there," said a Malaysia-based crude oil trader.

"With softening PG levels, I don't see reason for regional crudes to be strong," said an India-based crude oil trader.

In addition, weaker gasoil and jet fuel cracks may also dampen cash premiums for the February loading regional barrels.

The second-month Singapore gasoil and jet fuel swap crack spreads versus Dubai crude have averaged $12.53/b and $10.83/b in December to date, down from $13.04/b and $11.53/b in November, respectively, S&P Global Platts data showed.

Meanwhile for Malaysia's flagship Kimanis crude, the sentiment remained dull despite a shorter February loading program with expectations of lower cash premiums, traders said.

"Sweet crude prices are under pressure and sentiment appearing bearish for the February loading cycle," said a regional crude oil trader.

"Seems that market [differentials] are correcting downwards," said a Singapore-based crude oil trader.

There were seven 600,000-barrel cargoes of Kimanis crude available for February loading, down from eight cargoes on the month.

Brunei Energy held one cargo for Feb. 1-5 loading, which was earlier offered via a tender that closed Dec. 16 with validity till Dec. 20.

Last month, Brunei Energy sold a similar-sized cargo of Kimanis crude for Jan. 3-7 loading to Thailand's PTT at a premium of around $1.10/b to January Malaysian Crude Oil official selling price, FOB, traders said.

Traders also anticipated spot tender activities from ConocoPhillips in the coming days for more indications. The oil and gas company held three Kimanis cargoes for February loading and usually sells the crude on a Dated Brent basis.

Jet fuel demand tepid
The market sentiment in the Asian jet fuel/kerosene market has been subdued, sources said.

"The jet fuel market is very quiet because most market participants have already closed their books for the year. Other than supplying what they have committed, you won't expect to see much third-party trading during this period," a Singapore-based trader said.

Still, market participants said they were closely tracking developments relating to the omicron variant. The World Health Organization said Dec. 13 that omicron poses a "very high" global risk, with evidence that it evades protection, although clinical data on its severity was limited.

"Lockdowns remain a concern when it comes to jet fuel demand as there's still so much uncertainty as to how governments react to the omicron variant," another Singapore-based trader said.

At the 0830 GMT Asian close Dec. 15, the FOB Singapore jet fuel/kerosene cash differential rose to plus 57 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessment, up 5 cents/b on the day, Platts data showed.

Gasoil supply fundamentals stable
Over in the Asian ultra low sulfur diesel market, traders said while there were some demand concerns due to a potential surge in COVID-19 cases, fundamentals for the middle distillate were still holding steady for now.

"Gasoil is pretty okay, there is basically some concern," a regional trader said, adding that at the moment, participants were keeping a keen eye on the market.

Another trader said the steadiness in the Asian gasoil market has been underpinned by good regional demand, which has helped to prop up the complex even as regional supply length has increased due to closed East-West arbitrage lanes and higher export volumes of gasoil from China in December.

At the Asian close Dec. 15, the cash differential of 10 ppm sulfur gasoil for loading from Singapore rose 4 cents/b on the day to a premium of 64 cents/b to MOPS gasoil assessments.

Meanwhile, the physical crack for FOB Singapore 10 ppm sulfur gasoil against front-month cash Dubai held largely steady, closing the Asian session Dec. 15 at $13.76/b, down slightly from $13.79/b the previous day.

• [Editor:zhaozihao]