RTRS:Asia Distillates-Gas oil cracks drop further below $19/bbl
SINGAPORE, Aug 16 (Reuters) - Asian gas oil weakened at the front of the product's forward
curve, as persistently high supplies and lacklustre demand in the region continued to be a drag
on the market.
The east-to-west arbitrage window remained shut, but a restart of Taiwanese exports from
Formosa's 540,000-barrels per day refinery could make the economics workable, traders said.
Gas oil's front-month September crack lost 39 cents to $18.34 a barrel, while the
September/October timespread, which became the front-month contract on Tuesday, widened 3 cents
to a contango of 6 cents a barrel by 0830 GMT.
Trading activity picked up in the swaps market, with at least 200,000 barrels of the
September front-month swap transacted at $122.05-$122.20, up from 50,000 barrels a day earlier.
Another 50,000 barrels each of the October swap and the September/October timespread changed
hands.
"The cracks are still holding up pretty well, but that could change when Formosa comes back
online. We have to watch Japanese exports as well, to see if they divert more diesel for
domestic use," said a Singapore-based distillates trader.
Although Formosa has said it is ready to start up on Aug. 20 pending government approval, it
was not immediately clear when Asia's fifth largest refinery will be able to fully restore its
diesel exports, estimated at 800,000 tonnes a month.
Gas oil's cash differential strengthened for a second straight session on two deals in the
physical spot market done at higher price levels.
* SWAPS OUTRIGHTS: Gas oil's August swap rose 14 cents to $122.05 a barrel, while the
September swap gained 17 cents to $122.11 a barrel.
- Jet fuel swaps for August climbed 9 cents to $124.00 a barrel, while the August regrade
(the difference between jet and diesel prices) shed 5 cents to $1.95.
* CRACKS: Gas oil's crack for September fell 39 cents to $18.34 a barrel over Dubai crude.
- Jet fuel cracks lost 44 cents to $20.29.
* CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur narrowed 6 cents to
32 cents, while the premiums for the 0.25 percent and 0.05 percent sulphur grades were flat at
55 cent and $2.08, respectively.
- Jet fuel's cash discount was flat at 43 cents.
* PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5 percent rose 20
cents to $121.70 a barrel, while jet fuel lost 25 cents to $123.45.
* CASH DEALS: Two gas oil deals.
- Shell sold 250,000 barrels of 0.5 percent sulphur gas oil to Vitol for Sep 11-15 loading
at a discount of 30 cents to Singapore spot prices.
- SPC sold 150,000 barrels of 0.5 percent sulphur gas oil to Brightoil for Sep 10-14 loading
at the same price.
