RTRS:Asia Distillates-Gas oil market steady; lower stocks support
SINGAPORE, Aug 25(Reuters) - Asia's gas oil market was steady on Thursday,
as support from bullish inventory data was offset by a still shut east-west
arbitrage window despite a tight European market.
The front-month diesel crack slipped 4 cents to $17.43 by 0830 GMT, its
lowest level in almost two months, on higher crude prices overnight. The
product's prompt September/October contango edged up 2 cents to 15 cents a
barrel.
Singapore onshore diesel and jet stocks plunged 8.6 percent to a 12-week low
of 12.998 million barrels, official data showed on Thursday .
Stocks fell because Taiwan's Formosa declared force majeure on supplies
after it shut its 540,000 barrels per day (bpd) refinery at the end of July
following a fire at a secondary unit.
Formosa restarted one of its three crude distillation units late last week,
and exports from the refinery are expected to hit the market in the second half
of September, traders said.
In Europe, the gas oil prompt spread <0#LGO:> hit the widest backwardation
in about two years due to low inventory levels, a recent increase in North
African and South American purchases and expected reconstruction demand from
Libya, analysts and trade sources said on Wednesday.
However, this failed to make the economics of east-to-west arbitrage
shipments feasible due to the weakening of ultra-low sulphur, or 10-ppm, diesel
that is usually shipped West by Asian refiners.
"No, the window is not open because the 10-ppm differential to ICE gas oil
in Europe collapsed," said a Singapore-based distillates trader. Gas oil's
September EFS contract rose $5.42 to a discount of $19.94 a barrel by 0830 GMT,
Reuters data showed.
The jet fuel market weakened on Monday, as the product's front-month premium
to gas oil dropped below $2 a barrel to a near two-week low on ample supplies
and lacklustre demand.
The weakness was reflected in the physical market, where India's MRPL sold
one cargo of jet fuel to Mercuria at a discount of $2.50 to Singapore spot
quotes for mid-Sept delivery, down from a a previous deal done at a discount of
$1.50, traders said.
Volume in the swaps market was steady, with at least 350,000 barrels of the
September gas oil swap traded at $123.90 a barrel by 0830 GMT, up from 300,000
barrels a day earlier.
Another 100,000 barrels each of the of Sep/Oct timespread changed hands,
down from 300,000 barrels a day earlier. There was increased activity in the
regrade, with 250,000 barrels done at $1.85-$1.90, compared to no trades seen on
Wednesday.
* SWAPS OUTRIGHTS: Gas oil's September swap rose $1.60 to $123.85 a barrel,
while the October swap gained $1.58 to $124.00 a barrel.
- Jet fuel swaps for September climbed $1.15 to $125.75 a barrel, while the
September regrade, or the difference between jet and diesel prices, shed 45
cents to $1.90.
* CRACKS: Gas oil's crack for September slipped 4 cents to $17.43 a barrel
over Dubai crude.
- Jet fuel cracks fell 49 cents to $19.33 a barrel.
* CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur was
steady at 50 cents, while the premium for the 0.25 percent sulphur was flat at
60 cents a barrel. The 0.05 percent sulphur premium inched up 2 cents to $2.02 a
barrel.
- Jet fuel's cash discount was unchanged at 43 cents.
* PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5
percent rose $1.60 to $123.35 a barrel, while jet fuel added $1.20 to $125.35.
* CASH DEALS: One gas oil deal.
- Hin Leong bought 150,000 barrels of 0.5 percent sulphur gas oil from Shell
for Sept. 9-13 lifting at a discount of 60 cents a barrel to Singapore spot
quotes.
