RTRS:Asia Distillates-Gas oil timespreads flip into positive territory
SINGAPORE, Sept 5 (Reuters) - Asian gas oil's forward curve flipped into
backwardation on Monday, lifted by a strengthening physical spot market and as
the window to ship cargoes west stayed open.
The product's September/October timespread was valued at a backwardation of
4 cents a barrel by 0830 GMT, up 10 cents, Reuters data showed. October/November
rose 3 cents to parity, while November/December was up 5 cents to 3 cents a
barrel.
Gas oil's strength further narrowed its spread to jet fuel, with the
September regrade falling for the fifth straight session to a near 2-month low
of 83 cents a barrel.
Reflecting the market's interest, trading activity was focused in the
timespreads and regrade contracts. At least 450,000 barrels of the
October/November contract changed hands, while transactions were also seen in
the November/December, February/March and March/April spreads.
Another 200,000 barrels of the September regrade changed hands at 85-90
cents a barrel by 0830 GMT, up from 150,000 barrels on Friday.
In the physical spot market, the discount for the 0.5 percent sulphur grade
diesel narrowed for a third session as Hin Leong bought one cargo at steady
levels and Glencore put in an aggressive bid during the pricing window.
"Hin Leong and Glencore are back in the window buying again this month, and
that's supporting gas oil," said a Singapore-based distillates trader.
Market sentiment has also been buoyed by the opening of the East-to-West
arbitrage window, making it feasible for traders to ship excess Asian barrels to
Europe.
On Monday, Vietnam's Saigon Petro bought 10,000 tonnes of diesel with a
maximum 0.25 percent sulphur content for Oct. 6-10 arrival at a premium of $1.20
a barrel to Singapore quotes on a cost-and-freight (C&F) basis.
* SWAPS OUTRIGHTS: Gas oil's September swap fell $2.50 to $124.28 a barrel,
while the October swap lost $2.60 to $124.24 a barrel.
- Jet fuel swaps for September fell $2.82 to $125.11 a barrel, while the
September regrade, or the difference between jet and diesel prices, lost 32
cents to 83 cents.
* CRACKS: Gas oil's crack for October fell 22 cents to $17.80 a barrel over
Dubai crude.
- Jet fuel cracks dipped 32 cents to $19.10 a barrel.
* CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur
narrowed 8 cents to 20 cents, while the premium for the 0.25 percent sulphur and
0.05 percent sulphur grades were steady at 88 cents and $1.60 a barrel,
respectively.
- Jet fuel's cash discount was flat at 45 cents.
* PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5
percent fell $2.40 to $124.10 a barrel, while jet fuel lost $2.80 to $124.80.
* CASH DEALS: One gas oil deal, no jet fuel deals.
- Hin Leong bought 150,000 barrels of 0.5 percent sulphur gas oil from Shell
for Sep 20-24 lifting at a discount of 25 cents a barrel to Singapore spot
quotes.
