Asian gasoil differential edges higher

The Asian gasoil differential edged higher on Monday, supported by spot demand from Vietnam, though an anticipated surge of exports from the Middle East capped gains, industry sources said. The cash discount for the 500ppm sulphur gasoil gained 2 cents to minus 15 cents a barrel to Singapore quotes, Reuters data showed.
Vietnam's top fuel importer Petrolimex is seeking 35,000 tonnes of gasoil for mid-May after earlier buying a similar sized cargo for loading from Singapore or Malaysia in early May. Petrolimex has recently stepped up its imports of gasoil from Southeast Asia to take advantage of tax savings, which has helped to draw down inventory in Singapore, traders said.
It is now cheaper for Vietnam's importers to ship in oil products from Southeast Asia than buying from the domestic Dung Quat refinery, industry sources said. Jet fuel demand could be hit after the latest report from the International Air Transport Association (IATA) showed a flattening in growth trend in international air passenger volumes, particularly for premium passenger numbers.
"There were signs of stronger growth in Q3 2014, after a period of notable weakness mid-year, but that positive momentum has slowed again," according to the report. "Premium international air travel volumes have not increased since August 2014. This weakness is consistent with a lagged response to the waning business confidence throughout H2 2014."
In the Gulf, Abu Dhabi National Oil Co (ADNOC) is expected to ramp up run rates and have all of the units at its newly expanded Ruwais refinery operating by June, industry sources said.
The expanded refinery, which is currently running at close to 60 percent of capacity, aims to start up a residual fluid catalytic cracking (RFCC) unit and a hydrocracker unit by the end of April, one of the sources said. "The RFCC and hydrocracker will take about 2 to 3 months to stabilise by June, all the units should be onstream and production should be around 80 to 90 percent," the source said. Once production from the units stabilise, ADNOC's production of jet fuel and diesel are expected to double, with exports to flood the market, traders said. This could drag down Asian refinery margins, they added.