Over the next few months, Asian gasoil markets will continue to face headwinds even as economies gradually start picking up as the coronavirus pandemic becomes contained and refineries cut processing rates further.
Gasoil demand could be slashed by sluggish industrial activity and disruptions to global supply chains by more than 4 million bpd in Q2 from the same period in 2019. For gasoil with a sulphur content of 10 ppm, refining margins (known as cracks) this week dropped to a record low of $2.83 a barrel over Dubai crude.
Until last month, the gasoil crack showed resilience. In the last month, however, it has shed over 67 percent. Middle distillates (gasoil and jet fuel) account for about 40 percent of refiners’ output.
From April to June, coronavirus pandemic is expected to remove road diesel demand worldwide of nearly 4 million bpd. A drop by another 1.2 million bpd expected by diesel demand in other sectors.
In India, China, and other major domestic markets, subdued demand would likely force these countries to export more fuel into the region, which trade sources said already grappling with supplies.
