RTRS:Asia Distillates-Gas oil cracks falls to 2-month low
SINGAPORE, Aug 26 (Reuters) - Asia's gas oil market weakened on Friday to a
fresh two-month low as persistently high stockpiles in the region combined with
the impending return of exports from Formosa's 540,000 barrel per day refinery
in Taiwan.
The front-month diesel crack extended its losses, falling 14 cents to $17.29
by 0830 GMT. The product's prompt September/October contango was down 3 cents to
18 cents a barrel.
Formosa restarted one of the three crude distillation units (CDU) at its
refinery last week, which had been completely shut following a fire at a
secondary unit at the end of July.
Traders said the other two CDUs could possibly be restarted by the end of
the month, with exports to resume in the second half of September.
The market lost ground despite signs of easing supplies in the region.
Japan booked at least 16 tankers to ship 620,000 tonnes of fuel products in
August, down 100,000 tonnes from the previous month, as reconstruction efforts
boost domestic demand, traders said on Friday.
Japanese exports are expected to drop further next month as the world's
third-largest economy uses more fuel products to recover from the March
disaster.
"Shipments could fall in September. The Japanese refiners might divert more
diesel supplies for domestic use, with reconstruction activity already started,"
said a Singapore-based distillates trader. "They have also started stockpiling
kerosene for winter, so that will also affect exports."
While the east-to-west arbitrage window for gas oil remained shut, Shell has
provisionally chartered a vessel to carry 90,000 tonnes of gas oil from Taiwan
to the UK or continental Europe, for loading Sept. 1, shipping reports showed.
The jet fuel market strengthened marginally, with the product's premium to
gas oil rising above $2 a barrel by 0830 GMT, Reuters data showed.
Volume in the swaps market was steady, with at least 400,000 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 at a
contango of 18-19 cents, similar to volumes seen a day earlier.
In tender news, India's MRPL is offering 50,000 tonnes of gas oil for Oct.
1-3 delivery via a tender, which closes on Aug 31 and is valid till a day later.
The refiner is also offering 36,000 tonnes of jet fuel for Oct. 9-11 delivery
through a tender, which closes on the same date.
* SWAPS OUTRIGHTS: Gas oil's September swap fell 72 cents to $123.13 a
barrel, while the October swap dipped 69 cents to $123.31 a barrel.
- Jet fuel swaps for September shed 52 cents to $125.23 a barrel, while the
September regrade, or the difference between jet and diesel prices, rose 20
cents to $2.10.
* CRACKS: Gas oil's crack for September slipped 14 cents to $17.29 a barrel
over Dubai crude.
- Jet fuel cracks edged up 6 cents to $19.39 a barrel.
* CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur fell
5 cents 55 cents, while the premium for the 0.25 percent sulphur was up 10 cents
to 70 cents a barrel. The 0.05 percent sulphur premium lost 27 cents to $1.75 a
barrel.
- Jet fuel's cash discount edged up 3 cents to 40 cents.
* PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5
percent fell 75 cents to $122.60 a barrel, while jet fuel shed 50 cents to
$124.85.
* CASH DEALS: Two gas oil deals, one jet fuel deal.
- Hin Leong bought 100,000 barrels of jet fuel from Shell for Sep 13-17
lifting at 40 cents a barrel below Singapore spot quotes.
- Hin Leong bought 150,00 barrels of 0.5 percent sulphur gas oil from BP for
Sept. 10-14 lifting at 70 cents a barrel below Singapore spot quotes.
- Conoco sold 150,000 barrels of 0.05 percent sulphur gas oil to Shell for
Sept. 10-14 loading at $1.50 a barrel above Singapore spot quotes.
