Asian high sulfur gasoil strengthens on Indonesian buying interest

The Asian high sulfur gasoil market saw a rise in prices and a narrowing of the spread to its lower-sulfur counterpart, mainly due to increased Indonesian demand.

Partagez:

The Asian high sulfur gasoil market observed a price increase and a narrowing spread compared to low-sulfur gasoils. This trend is primarily attributed to expectations of continued spot demand, particularly from Pertamina, the Indonesian national oil company. This increased demand follows a decrease in domestic production due to technical issues at the Balikpapan refinery, according to sources close to the matter.

The Platts FOB Singapore 10-500 ppm sulfur gasoil spread narrowed by 2 cents/b on the day and by 16 cents/b on the week, reaching a more than two-month low of 49 cents/b at the Asian close on October 8. According to S&P Global Commodity Insights data, the tightest spread was previously recorded at 37 cents/b on July 31.

Impact of Technical Issues at Balikpapan

The 360,000 b/d Balikpapan refinery was initially expected to reduce its gasoil production until the end of October due to unexpected technical issues affecting the HDU (Hydrodesulfurization Unit) or HCU (Hydrocracking Unit), according to sources close to the matter. However, some sources remain skeptical about the refinery’s ability to resume normal operations by the end of the month.

In response, Indonesia has issued two tenders amounting to at least 2.7 million barrels of high sulfur gasoil for October delivery. Market players are currently assessing whether this demand will continue into November, pending the resolution of issues at the Balikpapan refinery.

Increased Demand from Pertamina

Pertamina was heard seeking up to 400,000 barrels of 2,500 ppm high-speed diesel loading from Singapore or Malaysia over October 14-25. Additionally, up to 1.2 million barrels are expected for delivery to Tuban, Tanjung Uban, and Pulau Laut between October 21 and October 31, via a tender closing on October 9 with two-day validity, sources indicated.

Earlier, Pertamina sought up to 1.5 million barrels of high-speed diesel with a maximum 2,500 ppm sulfur content, loading over September 28-October 6, for delivery on various dates from October 3 to October 31 to Tuban, Balikpapan, and Pulau Laut, according to Commodity Insights.

A Singapore-based gasoil trader stated: “There could potentially be 1.5 to 2 million barrels of demand from Indonesia due to the Balikpapan refinery issues.”

Domestic Production Impact

Indonesia’s domestic gasoil demand is also expected to rise amid seasonal demand as the year-end holiday period in December approaches, sources said. However, the fall in Indonesia’s gasoil production could be mitigated as overall gasoil production could be buoyed in the short term due to the delayed planned turnaround of the Cilacap refinery, with a capacity of 348,000 b/d.

Pertamina postponed the Cilacap maintenance initially scheduled from October 15 to November 15 to boost national production, following an earlier unplanned turnaround at the Balikpapan refinery, according to a source close to the matter.

Market Spread Evolution and Sentiment

Some recent trades occurred in the ultra-low sulfur gasoil segment in Asia this week, capping market gains despite shorter supply in October compared to September due to higher domestic consumption during the harvest season. However, Chinese economic stimulus, Indonesian spot activity for high sulfur gasoil, and expectations of resumed activity this week post-holidays in North Asia have strengthened trading sentiment for ultra-low sulfur gasoil.

The Platts-assessed cash differential for ultra-low sulfur gasoil cargoes loading from Singapore was last assessed at a premium of 29 cents/b at the Asian close on October 8, up 5 cents/b day on day and 1 cent/b on the week, according to Commodity Insights data.

In comparison, gains were more significant for the high sulfur segment, as the Platts-assessed cash differential for FOB Singapore 500 ppm gasoil cargoes was last assessed at a discount of 20 cents/b at the Asian close on October 8, up 7 cents/b on the day and 17 cents/b on the week, according to Commodity Insights.

Market Outlook

Reflecting increased interest in the product, the Platts-assessed FOB Singapore 10 ppm sulfur gasoil derivative crack spread to front-month Dubai swap – a measure of the product’s relative strength to the crude it was refined from – widened by $1.24/b to an average of $14.26/b in the week to October 8, higher than the average of $13.02/b in the previous week.

The United Kingdom tightens sanctions against Russia's oil sector by targeting twenty tankers operating in the "shadow fleet" and Rosneft Marine, amid rising crude prices exceeding the G7-imposed price cap.
French manufacturer Vallourec will supply Qatar with premium OCTG tubes in a contract worth an estimated $50 million, supporting the planned expansion of oil and gas operations by 2030.
SBM Offshore has secured an operations and maintenance contract from TotalEnergies for the FPSO GranMorgu unit, the first such project in Suriname, covering operational preparation and post-production maintenance for at least two years.
Maurel & Prom acquires additional stakes in two offshore oil blocks in Angola, consolidating its existing assets for an initial sum of $23mn, potentially rising based on market developments and production performance.
Long a major player in OPEC, Iran sees its influence on the oil market significantly reduced due to US sanctions, Israeli strikes, and increasing reliance on exports to China.
After several months of interruption following a major political upheaval, Syria's Banias refinery has shipped its first cargo of refined products abroad, marking a partial revival of its energy sector.
ExxonMobil and its partners have extended the production sharing contract for Block 17 in Angola, securing the continued operation of major infrastructure in a key offshore asset for Africa’s oil sector.
Egypt’s General Petroleum Company discovers a new oil field in Abu Sannan, producing 1,400 barrels per day, confirming growing interest in this mature Western Desert region.
TotalEnergies takes 25 % of a portfolio of 40 exploration permits on the US Outer Continental Shelf, deepening its partnership with Chevron in the Gulf of Mexico’s deepwater.
OPEC confirms global oil demand estimates for 2025-2026 despite slightly adjusted supply, while several members, including Russia, struggle to meet their production targets under the OPEC+ agreement.
Facing anticipated refusal from G7 countries to lower the Russian oil price cap to $45, the European Union weighs its options, leaving global oil markets awaiting the next European sanctions.
Starting August 15, the Dangote refinery will directly supply gasoline and diesel to Nigerian distributors and industries, expanding its commercial outlets and significantly reshaping the energy landscape of Africa's leading oil producer.
The sudden appearance of hydrocarbon clusters has forced the closure of beaches on the Danish island of Rømø, triggering an urgent municipal investigation and clean-up operation to mitigate local economic impact.
Canadian company Cenovus Energy has fully resumed oil sands production at its Christina Lake site following a wildfire-related shutdown in Alberta.
Argentine company Compañía General de Combustibles is starting operations in the Vaca Muerta shale basin while boosting heavy crude production due to strong local demand and rising prices.
Oil-backed financing is weakened by falling crude prices and persistent production constraints in the country.
Italiana Petroli, in negotiations with three potential buyers, is expected to finalize the total sale of the group for around €3 billion by late June, according to several sources close to the matter speaking to Reuters on Thursday.
ExxonMobil has been named the most admired upstream exploration company in Wood Mackenzie’s latest annual survey, recognised for its performance in Guyana and its ability to open new resource frontiers.
Petronas' workforce reduction reignites questions about internal trade-offs, as the group maintains its commitments in Asia while leaving uncertainty over its operations in Africa.
The Kremlin condemns the European proposal to lower the price cap on Russian oil to $45 per barrel, asserting that this measure could disrupt global energy markets, as the G7 prepares for decisive discussions on the issue.