Bloomberg News

Asia Fuel-Oil Discount Widens; Gasoil Crack Drops: Oil Products

October 06, 2011

Oct. 6 (Bloomberg) -- Asia fuel oil sank to the biggest discount to crude in six days, signaling growing losses for refiners turning oil into residual products. Gasoil’s crack spread, a measure of processing profit, fell.

Fuel Oil

Fuel oil’s discount to Asian marker Dubai crude widened 9 cents to $3.51 a barrel at 12:45 p.m. Singapore time, according to PVM Oil Associates Ltd., a broker. That’s the largest gap since Sept. 28, when a fire in Singapore prompted Royal Dutch Shell Plc to shut its largest refinery globally and suspend some fuel exports.

High-sulfur fuel oil swaps for November added $9.50, or 1.6 percent, to $610.50 a metric ton, PVM data showed. Prices snapped a five-day losing streak. The premium of 180-centistoke fuel oil to 380-centistoke grade was unchanged after decreasing to $7.25. A narrower viscosity spread indicates bunker, or marine fuel, has gained more than higher-quality fuel oil.

Middle Distillates

The premium of gasoil, or diesel, to Dubai crude fell 80 cents to $16.87 a barrel, according to PVM. This crack spread was the narrowest since Sept. 28.

November gasoil swaps rose 75 cents, or 0.7 percent, to $114.30 a barrel, PVM said. Jet fuel’s premium to gasoil climbed 10 cents to $2.60. This regrade has increased 53 percent so far this week, meaning it is more profitable to make aviation fuel over diesel.

Light Distillates

Japan’s open-specification naphtha forward contracts for first-half November delivery were bid at $866.50 a ton against offers at $869.90, according to Ginga Petroleum Singapore Pte, a broker. This signals the petrochemical feedstock may advance after closing at $856.75 yesterday.

Naphtha’s premium to London-traded Brent crude futures, also known as the crack spread, was up $3.16 at $85.95 a ton, based on data compiled by Bloomberg. Yesterday, it dropped to the narrowest since Aug. 5.

Gasoline’s premium to naphtha yesterday rallied to $23.40 a barrel, the highest since May 6, Bloomberg data showed. A widening reforming margin indicates motor fuel is more profitable to produce.

--Editors: Ryan Woo, Mike Anderson.

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 in Hong Kong at pgordon6@bloomberg.net.


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