Bloomberg News

Asia Fuel-Oil Discount Narrows as Hin Leong Buys: Oil Products

October 04, 2011

Oct. 4 (Bloomberg) -- Asia fuel oil’s discount to crude shrank as Hin Leong Trading Pte bought a cargo for a second day in Singapore. Formosa Petrochemical Corp. lifted a force majeure on fuel exports from its Mailiao refinery in Taiwan.

Fuel Oil

Hin Leong purchased 20,000 metric tons of 380-centistoke fuel oil from Gunvor Group Ltd. in Singapore, the region’s biggest oil-trading center, according to a Bloomberg News survey of traders monitoring transactions on the Platts window. The closely held trader paid $618 a ton for Oct. 19 to Oct. 23, the earliest loading period.

Fuel oil’s discount to Asian benchmark Dubai crude narrowed 29 cents to $2.09 a barrel at 2 p.m. Singapore time, based on data from PVM Oil Associates Ltd., a broker. That’s the smallest gap since Feb. 8, 2010, indicating reduced losses for refiners turning crude into residual products.

The premium of 180-centistoke fuel oil to 380-centistoke grade advanced 75 cents to $8.50 a ton, PVM said. This viscosity spread is the widest in two weeks, signaling higher-quality fuel oil has declined more than bunker, or marine fuel.

Middle Distillates

Hin Leong bought 250,000 barrels of 0.5 percent sulfur gasoil from Lukoil OAO, according to the Bloomberg News survey. Singapore-based Hin Leong received a discount of 10 cents a barrel to average quotes for October.

Gasoil’s premium to Dubai crude, or the crack spread, climbed 18 cents to $18.49 a barrel at 2 p.m. Singapore time, based on PVM data. This measure of refining profit gained for a fourth day, the longest rally in three months.

Jet fuel’s premium to gasoil was unchanged after rising to $2.80 a barrel, PVM said. This regrade was the highest since Feb. 23, indicating it is more profitable to produce aviation fuel over diesel.

BP Plc bought 100,000 barrels of jet fuel from Morgan Stanley at 10 cents a barrel over benchmark quotes, the survey showed. BP has purchased at least seven cargoes since Sept. 22.

Light Distillates

Naphtha’s premium to London-traded Brent crude futures dropped $7.49 to $96.22 a ton at 5:45 p.m. Singapore time, based on data compiled by Bloomberg. This crack spread was the narrowest since Sept. 15.

Royal Dutch Shell Plc bought two 50,000-barrel gasoline cargoes from Vitol Group in Singapore, according to the Bloomberg News survey. Shell, which declared force majeure Oct. 2 on supply from its Pulau Bukom refinery, paid $118.90 a barrel for 97-RON grade and $116.80 for 95-RON. The cargoes will load between Oct. 19 and Oct. 23.

Gasoline’s premium to naphtha increased $1.45 to $21.30 a barrel, the highest in three months, Bloomberg data showed. A widening reforming margin means motor fuel is more profitable to produce.

--With assistance from Ann Koh in Singapore. Editors: Mike Anderson, Christian Schmollinger.

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

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net


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