Bloomberg News

Asia Fuel-Oil Discount Narrows; Shell Buys Gasoil: Oil Products

September 29, 2011

Sept. 29 (Bloomberg) -- Asia fuel oil’s discount to crude shrank to the smallest in more than seven months. Royal Dutch Shell Plc bought gasoil and gasoline in Singapore, where a fire at its biggest refinery continued for a second day.

Fuel Oil

Fuel oil’s discount to Asian benchmark Dubai crude narrowed $1.23 to $3.06 a barrel at 2:19 p.m. Singapore time, according to PVM Oil Associates Ltd., a broker. That’s the smallest gap since Feb. 24, indicating reduced losses for refiners turning crude into residual products.

The premium of 180-centistoke fuel oil to 380-centistoke grade declined 50 cents to $7 a metric ton, PVM data showed. This viscosity spread is the narrowest since Aug. 23, meaning fuel oil has fallen more than bunker, or marine fuel.

Middle Distillates

Shell bought 150,000 barrels of gasoil with 10 parts-per- million of sulfur from Hin Leong Trading Pte, according to a Bloomberg News survey of traders monitoring transactions on the Platts window. Europe’s largest oil company paid $2.90 a barrel above quotes, up from a $2.80 premium in a transaction yesterday.

Gasoil’s premium to Dubai crude rose $1.35 to $17.57 a barrel at 2:19 p.m. Singapore time, according to PVM. This crack spread, a measure of refining profit, widened the most since Sept. 16.

Jet fuel’s premium to gasoil fell 10 cents to $1.30 a barrel, PVM said. This regrade dropped for the third day, meaning it is less profitable to produce aviation fuel over diesel.

Vitol Group sold 100,000 barrels of jet fuel to BP Plc for a second day, the survey showed. The cargo changed hands at 10 cents a barrel below quotes, from a 30-cent discount yesterday.

Light Distillates

Naphtha’s premium to London-traded Brent crude futures dropped $8.81 to $129.33 a ton at 6 p.m. Singapore time, based on data compiled by Bloomberg. This crack spread fell for the first time in three days.

In Singapore, Shell bought 50,000 barrels of 95-RON gasoline from BP at $120.60 a barrel, according to the survey.

Gasoline’s premium to naphtha increased $1.45 to $18.25 a barrel, Bloomberg data showed. A rising reforming margin indicates motor fuel is more profitable to produce.

--Editors: John Chacko, Alexander Kwiatkowski

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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