SINGAPORE, Aug 18 (Reuters) - Asia's gas oil market weakened on Thursday as ample regional supplies and lacklustre demand weighed on sentiment and helped push the regrade to its highest level in 5-1/2 months.
Diesel's front-month crack slipped below $18.00 a barrel to a three-week low, while the September/October and October/November timespreads saw their discounts widen, Reuters data showed.
Trading in gas oil swaps continued thin, with 100,000 barrels each of the September fixed-price contract and September/October timespread seen transacted by 0830 GMT. However, there was heavier than usual activity in the regrade, which measures the price differential between jet fuel and gas oil. At least 250,000 barrels of September, October and November regrade contracts changed hands.
The buying interest helped to widen the spread for a fifth straight session to $2.30 a barrel, its highest since March 2.
However, there were no deals concluded in the physical spot market, with cash differentials for jet fuel and all benchmark grades of gas oil unchanged.
Persistently high stockpiles of middle distillates have been a drag on the market. While Singapore onshore inventories of gas oil and jet fuel fell 4.1 percent in the week ended Aug. 17, it remained above 14 million barrels for a second straight week, government data showed on Thursday.
The re-start of Formosa's 540,00 barrels-per-day refinery in Mailiao, Taiwan continues to be the market's focus, with traders saying that it is likely to come back online later than the Aug. 20 date set by the company. The actual date will depend on a government review this week, although traders do not expect exports from the refinery to reach the market until September at the earliest.
"Everybody's looking at Formosa, its hard to take a position without knowing how long it will be out for. Already, we hear they are looking for September cargoes to fulfil their term obligations," said a Singapore-based distillates trader.
Elsewhere, Jurong Aromatics Corporation, a $2.4 billion project involving a condensate splitter and aromatics facility on Singapore's Jurong Island, will produce 2.7 million tonnes per year (tpy) of petroleum products when it comes online in late 2014.
This will include 783,000 tpy of jet fuel and 662,000 tpy of ultra-low sulphur diesel, the company said on Thursday.
In tender news, UAE fuel retailer Emarat has bought 30,000 tonnes of gas oil from Emirates National Oil Co (ENOC), traders said. The tender was to help meet Emarat's higher summer demand and Emarat bought the cargo at around $4 a barrel to Middle East spot quotes on a cost-and-freight (CIF) basis. Emarat also bought 40,000 tonnes of jet fuel for Sep 17-19 delivery at around $2.80 to Middle east spot quotes.
* SWAPS OUTRIGHTS: Gas oil's September swap fell 28 cents to $123.00 a barrel, while the October swap slipped 20 cents to $123.11 a barrel.
- Jet fuel swaps for September shed 13 cents to $125.30 a barrel, while the September regrade, or the difference between jet and diesel prices, added 15 cents to $2.30.
* CRACKS: Gas oil's crack for September dipped 40 cents to $17.93 a barrel over Dubai crude.
- Jet fuel cracks lost 25 cents to $20.23 a barrel.
* CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur was steady at 25 cents, while the premiums for the 0.25 percent and 0.05 percent sulphur grades were also flat at 60 cents and $2.10 a barrel, respectively.
- Jet fuel's cash discount was unchanged at 43 cents.
* PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5 percent fell 25 cents to $122.75 a barrel, while jet fuel slipped 15 cents to $124.80.
* CASH DEALS: No deals reported.
PRODUCT RIC BID ASK MEAN PREV CHG % CHG Jet/Kero JET-SIN 124.60 125.00 124.80 124.95 -0.15 -0.12 Gas Oil 0.5% GO-SIN 122.55 122.95 122.75 123.00 -0.25 -0.20
Gas Oil GO25-SIN 123.40 123.80 123.60 123.85 -0.25 -0.20 0.25% Gas Oil GO005-SIN 124.90 125.30 125.10 125.35 -0.25 -0.20 0.05% Jet/Kero JET-SIN-DIF -0.53 -0.33 -0.43 -0.43 0.00 0.00 Diff GO 0.05 Diff GO005-SIN-DI 2.00 2.20 2.10 2.10 0.00 0.00
F GO 0.25 Diff GO25-SIN-DIF 0.50 0.70 0.60 0.60 0.00 0.00 GO 0.5 Diff GO-SIN-DIF -0.35 -0.15 -0.25 -0.25 0.00 0.00 GO Swap M1 GOSGSWMc1 123.00 123.28 -0.28 -0.23 GO Swap M2 GOSGSWMc2 123.11 123.31 -0.20 -0.16
(Reporting by Francis Kan; Editing by Anthony Barker)