(Bloomberg) -- Be it winter or spring, it’s sunny days for diesel in Asia.
Freezing weather over the past few months and a gas shortage lifted profits from making the fuel as heating demand increased in Asia. Now, while the mercury is starting to edge up again, refineries are set to undergo spring maintenance and keep supplies of the fuel scarce. That’s making regional prices attractive enough to draw unusual shipments from the Middle East.
Traders were said to have booked two tankers to send cargoes from the Persian Gulf and Red Sea last month and in March. At least two more -- the LR2 Polaris, hired by Saudi Arabian Oil Co., and Front Capella, chartered by Royal Dutch Shell Plc -- have also been set to load 160,000 metric tons this month from Yanbu for Singapore. As demand remains relatively weak in Europe, more shipments may arrive instead in Asia, according to Bloomberg survey of five traders and analysts.
Diesel, also known as gasoil, in Singapore had hit a premium of $1.26 a metric ton over that in Europe in mid-February, indicating that Asia offered better prices for the fuel, according to Anoop Singh, an analyst at shipbroker Braemar ACM. While it’s now fallen back to a discount, the gap may remain volatile in the next few months, which “implies that more opportunistic trades on gasoil to Asia could be placed,” he said.
©2018 Bloomberg L.P.
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