August 18, 2011 / 11:51 AM / 8 years ago

Asia Distillates-Gas oil weaker; regrade jumps

 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)	
 
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