September 7, 2011 / 10:21 AM / 8 years ago

Asia Distillates-Gas oil Sep/Oct timespread nears 4-mth peak

 SINGAPORE, Sept 7 (Reuters) - Asia's gas oil market strengthened on
Wednesday, with the September/October timespread rising to near 4-month highs on
the prospect of higher diesel demand from China in the face of expected winter
shortages.    	
 The product's September/October timespread was valued at a backwardation of
12 cents a barrel by 0830 GMT, up 3 cents, its fifth straight session of gains.	
 "We could see a repeat of last year when prices jumped after factories
turned to diesel generators to get around limits on power consumption," said a
Singapore-based distillates trader.	
 Some Chinese provinces will face a power crunch in the winter even though
electricity demand growth will be curbed by an energy-efficiency drive, an
official with the China Electricity Council (CEC) said. 	
 Prices were also supported by lower Japanese stockpiles of middle
distillates in the week ended Sept. 3, official data showed on Wednesday. Gas
oil inventories fell over 2 percent to 2.15 million kilolitres, while exports
were down 23 percent to around 176,000 kilolitres for the week. 	
 Taiwan's Formosa Petrochemical Corp will restart the last of three crude
distillation units (CDUs) at its refinery by Thursday after the plant was
completely shut in end-July following a fire, a company spokesman said on
Tuesday. 	
 "The market has pretty much priced in the return of Formosa's exports," said
another trader.   	
 Each CDU has a throughput of 180,000 barrels per day (bpd) at the 540,000
bpd refinery. For a factbox on Formosa, please click 	
 The cash differential for the gas oil's 0.5 percent sulphur grade
strengthened for a fifth session, rising 2 cents to a discount of 14 cents a
barrel by 0830 GMT. Hin Leong continued to be an active buyer in the physical
market, picking a 180,000-barrel cargo at a discount of 10 cents a barrel during
the pricing window.	
 The strength in the gas oil market further narrowed its spread to jet fuel
prices, with the September regrade losing 20 cents to 70 cents, its lowest level
in almost two months. 	
 At least 300,000 barrels of September gas oil swap were done at
$126.10-$126.20 during the pricing window, up from 150,000 barrels a day
earlier. Another 50,000 barrels of the November/December contract changed hands
at 2 cents a barrel.	
 A further 50,000 barrels of the September jet fuel swap transacted at
$126.70 a barrel.	
	
 * SWAPS OUTRIGHTS: Gas oil's September swap rose $2.40 to $126.15 a barrel,
while the October swap was $2.37 higher at $126.03 a barrel.           	
- Jet fuel swaps for September gained $2.20 to $126.85, while the September
regrade, or the difference between jet and diesel prices, fell 20 cents to 70
cents.           	
           	
 * CRACKS: Gas oil's crack for October fell 29 cents to $17.50 a barrel over
Dubai crude. 	
 - Jet fuel cracks lost 46 cents to $18.75 a barrel.           	
           	
 * CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur
narrowed 2 cents to 14 cents, while the premium for the 0.25 percent sulphur
grade dipped 2 cents to 83 cents. The 0.05 percent sulphur grade was steady at
$1.55.	
 - Jet fuel's cash discount was flat at 45 cents.        	
               	
 * PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5
percent was $2.40 higher at $125.95 a barrel, while jet fuel rose $2.25 to
$126.60.	
               	
 * CASH DEALS: Two gas oil deals, no jet fuel deal.	
 - Hin Leong bought 180,000 barrels of 0.5 percent sulphur gas oil from BP
for Sep 22-26 lifting at a discount of 10 cents a barrel to Singapore spot
quotes.	
 - Shell bought 150,000 barrels of 10ppm sulphur grade from ConocoPhillips
for Sep 22-26 lifting at a premium of $3.00 a barrel to Singapore spot quotes.	
	
 PRODUCT       RIC           BID     ASK    MEAN   PREV   CHG    % CHG
 Jet/Kero      JET-SIN       126.40  126.8  126.6  124.3  +2.25  +1.81
                                      0      0      5         
 Gas Oil 0.5%  GO-SIN        125.75  126.1  125.9  123.5  +2.40  +1.94
                                      5      5      5         
 Gas Oil       GO25-SIN      126.75  127.1  126.9  124.5  +2.40  +1.93
 0.25%                                   5      5      5         
 Gas Oil       GO005-SIN     127.65  128.0  127.8  125.2  +2.60  +2.08
 0.05%                                   5      5      5         
 Jet/Kero      JET-SIN-DIF    -0.55  -0.35  -0.45  -0.45   0.00   0.00
 Diff                                                            
 GO 0.05 Diff  GO005-SIN-DI    1.45   1.65   1.55   1.55   0.00   0.00
            F                                                 
 GO 0.25 Diff  GO25-SIN-DIF    0.73   0.93   0.83   0.85  -0.02  -2.35
 GO 0.5 Diff   GO-SIN-DIF     -0.24  -0.04  -0.14  -0.16  +0.02   n.a.
 GO Swap M1    GOSGSWMc1                    126.1  123.7  +2.40  +1.93
                                             5      5         
 GO Swap M2    GOSGSWMc2                    126.0  123.6  +2.37  +1.92
                                             3      6         
 	
	
 (Reporting by Francis Kan; Editing by Miral Fahmy)	
 
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