<article><p class="lead">Spot differentials for Asia-Pacific crude have surged for cargoes due to load in January 2021 thanks to rising middle distillates margins and optimism over Covid-19 vaccines. The strength is likely to extend to February-loading cargoes, traders said.</p><p>January-loading light and medium sweet Malaysian and Vietnamese crudes have traded at significantly higher prices than December-loading cargoes over the past month. Middle distillates-rich Malaysian Labuan was sold this month at a premium close to $2.50/bl to North Sea Dated for January loading, the highest premium since October-loading volumes also traded at $2.50/bl to Dated. </p><p>Medium sweet Vietnamese Ruby crude was sold at a four-month high premium of slightly above $2/bl to Dated for January loading. Ruby was last this high in July, when September-loading volumes were sold at a premium near $3/bl to Dated. </p><p>January-loading medium sweet Vietnamese Chim Sao crude has traded at a premium of around $1.50-1.60/bl to Dated, the highest premium for the grade in about three months. And January-loading Bunga Orkid crude, which is produced in the Malaysia-Vietnam joint development area, was sold at around a $2/bl premium to Dated, the firmest price in nearly five months. </p><p>The strong premiums are a far cry from just three months ago, when Malaysian and Vietnamese crudes were <a href="https://direct.argusmedia.com/newsandanalysis/article/2136095">sold at discounts to Dated</a> because of depressed refinery margins.</p><p>The Malaysian and Vietnamese crudes are usually sold to refineries in China, Australia and southeast Asia. Jet fuel and gasoil margins in Asia-Pacific have firmed this month, lifting refiners' demand for short-haul regional crudes. Asian jet fuel margins, or the spread between fob Singapore jet fuel swaps and Dubai crude values, rose to <a href="https://direct.argusmedia.com/newsandanalysis/article/2156929">a four-month high of $2.53/bl in early November</a> and hovered at just above $3/bl this week. Singapore gasoil margins to Dubai crude have also been supported compared with previous months, in part because of lower supplies following refinery run cuts in Japan and South Korea and rising domestic demand from China and India.</p><p>Asia-Pacific crude sellers are banking on the market for February-loading cargoes to be just as firm, amid positive news about Covid-19 vaccine trials in recent weeks. But the impact of rising coronavirus infections on the oil demand recovery remains a concern.</p><p class="bylines">By Rhalain Reyes</p></article>
