Oil Report

UPDATE 1-China cuts April diesel exports to 220,000T-traders

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SINGAPORE, April 7 (Reuters) - China is cutting diesel exports in April to 220,000 tonnes from earlier estimates of 250,000 tonnes because of rising domestic consumption, traders said on Tuesday.

PetroChina 0857.HK is expected to ship out 70,000 tonnes, down from 100,000 tonnes in a previous forecast, while rival Sinopec Corp's 0386.HK exports held steady at 150,000 tonnes, they said.

“It is mostly due to increasing demand in China, with the agriculture sector being the main driver,” said one trader who is familiar with the flows.

Reflecting stronger fundamentals, wholesale diesel prices in the southern Chinese market have risen to 5,000 yuan ($732.00) a tonne from 3,900 yuan ($571.00) last month.

“Previously diesel supplies were heavy but the levels have eased,” said a trader in Guangzhou.

Wholesale prices were bolstered by a recent pump price hike of 3-5 percent in China on March 25, the trader added.

The first such increase in three months prompted wholesalers to refill their tanks and to draw down high refinery stockpiles, amid peak agriculture demand.

With China scaling back exports, the gas oil intermonth swaps spread in Singapore strengthened to minus 30 cents from minus $1.15 a barrel a month ago. <SWAPS/SG1> ($1=6.83 yuan) (Reporting by Felicia Loo; Editing by Ben Tan)