SINGAPORE: Asia’s cash premiums for 10 ppm gasoil rose to an over three-week high on Friday, posting a second consecutive weekly gain, lifted by tight global supplies.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of $7.42 a barrel to Singapore quotes, the highest since March 10. The premiums were at $6.99 per barrel a day earlier, and have risen 19.3% this week.

Singapore’s middle distillate inventories have slid to their lowest level in more than eight years this week, while traders said more barrels from India and the Middle East are expected to head to the West as buyers continue to shun Russian supplies.

A recent resurgence in COVID-19 cases in China that has led to reimposed lockdowns, however, would weigh on the region’s near term demand, market watchers said.

“Even if China turns to the export market with the surplus barrels, it may not be able to cool down the market, which is too hot now,” a gasoil trader said.

Refining margins, also known as cracks, for 10 ppm gasoil slipped for a sixth consecutive session to $26.43 a barrel over Dubai crude during Asian trading hours, compared with $29.76 a barrel on Thursday.

The cracks, however, are still about 135% higher compared with their five-year seasonal average for this time of the year, Refinitiv Eikon data showed. Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp refining and storage hub dropped 3.8% to 1.6 million tonnes in the week ended March 31, according to Dutch consultancy Insights Global.