SINGAPORE: Asia’s cash premiums for 10 ppm gasoil climbed on Monday, lifted by stronger deals in the physical trade window, while refining margins for the industrial fuel grade slipped despite weaker feedstock crude prices.

Cash differentials for gasoil with 10 ppm sulphur conten were at a premium of $6.73 a barrel to Singapore quotes, up from $5.81 per barrel on Friday.

Refining margins, also known as cracks, for 10 ppm gasoil dropped 51 cents to $55.39 per barrel over Dubai crude during Asian trading hours, drifting lower from a record high of $56.75 touched last week.

The recent strength in gasoil cracks would likely start easing in the third quarter as regional refiners ramp up supplies, trade sources said, while heavy rainfall and floods during peak monsoon season typically dent transportation demand in some markets.

But even though the cracks soften after peaking in June, they are expected to remain at historically elevated levels in coming months, market watchers said.

US oil producers profiting from sky-high prices are doling out billions to shareholders and building cash reserves, a strategy that has irked lawmakers and voters struggling with record fuel prices but is winning over Wall Street.

Soaring fuel prices have boosted inflation to a 40-year record and are expected to drive up US gasoline by more than a dollar to $6 a gallon by August. That prospect has some officials arguing the industry’s focus on returns is benefiting a few at the expense of consumers.

Three gasoil deals, no jet fuel trades. Oil dropped about $2 a barrel on Monday as a flare-up in COVID-19 cases in Beijing dented hopes of a Chinese demand rebound, while worries about more interest rate hikes to control rampant inflation added further pressure.