Asian diesel cracks rally again as Indian infections remain high

London, (Quantum Commodity Intelligence) - Asian refining margins looked to have improved on Monday, with rises in swaps for gasoline, diesel and jet kero outpacing the relative rise in crude oil, although as a percentage of Brent, diesel margins continued to set the pace.

By 16.30 Singapore time the June swap versus August cash Brent crack for 10ppm diesel basis FOB Singapore – the benchmark across Asia – was marked at $6.59/b, up $0.61/b on the day and the highest in more than a year.

As a percentage of Brent crude, 10ppm rose to 9.09% from 8.4%, meaning even with higher crude prices, diesel was much firmer.

The figure comes amid falling run rates at Indian refiners, who typically are exporters of the road fuel in the region.

According to data from Indian refiners circulated Monday, diesel demand was 63% down in the first two weeks of May versus March levels, with sales of jet kero falling by more than half as the country battles the latest outbreak of Covid-19 infections.

Reports suggest that has translated into much lower run rates, despite a delay to refinery turnarounds.

Despite this, jet kero cracks rose Monday, shrugging off concerns that European summer air travel may be hit by the spread of the so-called Indian variant there after the British health secretary told Britains not to book holidays in most of Europe this summer.

The June swap basis FOB Singapore versus August cash Brent was $3.89/b, up $0.14/b and recovering some of Friday's losses.

However, the flat price percentage versus Brent was up only slightly at 5.68% versus 5.6% on Friday, indicating a sideways move.

In gasoline, cracks were also higher, although like jet kero they remain well off last week's highs.

RON 92 specification June swaps versus August cash Brent was pegged at $5.14/b, up $0.31/b on the day, but down more than $1/b from Thursday's levels.

As a percentage of Brent, the RON 92 crack was 7.5%, up from 7.22%, but down on the 9% chalked up on Thursday, as concerns about transport demand in the region weigh after Japan extended restrictions to more areas of the country on Friday.

According to Google mobility data, the seven-day average for Japanese mobility is 11.5% lower than the January average.

That figure stood at just a 6% decline on January a week earlier.