Bloomberg News

Shell Boosts Gasoline Buying; Gasoil Crack Drops: Oil Products

October 12, 2011

Oct. 12 (Bloomberg) -- Royal Dutch Shell Plc extended its gasoline-cargo purchases in Singapore, where the company is resuming some operations at the Pulau Bukom refinery after a Sept. 28 fire. Gasoil’s crack spread narrowed.

Light Distillates

Shell bought two 50,000-barrel cargoes of gasoline in Singapore, bringing its purchases since Sept. 29 to at least 700,000 barrels, according to a Bloomberg survey of traders monitoring transactions on the Platts window. The company paid $130 a barrel to Total SA for a 97-RON cargo and $125.30 a barrel to Vitol Group for 95-RON grade.

Vitol bought two similar-sized 92-RON cargoes, paying $123.50 a barrel to PetroChina Co. and Morgan Stanley, the survey showed. Shell also purchased a 25,000 metric-ton open- specification naphtha contract for first-half December for a third day, paying Vitol $906 a ton.

Gasoline’s premium to naphtha fell $2 to $24.80 a barrel, declining from the highest since May 6, according to data compiled by Bloomberg. This reforming margin widened in the previous nine days, signaling motor fuel was more profitable to produce.

Naphtha’s premium to London-traded Brent crude futures rose $25.47 to $63.36 a ton at 5:55 p.m. Singapore time, according to Bloomberg data. This crack spread, a measure of refining profit, rebounded from the lowest since May 2009.

Middle Distillates

Shell sold 150,000 barrels of gasoil, or diesel, with 0.5 percent sulfur to Glencore International AG in Singapore, according to the Bloomberg survey. Europe’s largest oil company received 50 cents a barrel over benchmark quotes, an increased premium from 30 cents in a transaction yesterday. The cargo is for Oct. 27 to Oct. 31, the earliest loading period.

Gasoil’s premium to Asian marker Dubai crude slid 67 cents to $15.30 a barrel at 6:18 p.m. Singapore time, based on data from PVM Oil Associates Ltd., a broker. This crack spread was the narrowest since Sept. 15.

Jet fuel’s premium to gasoil decreased 25 cents to $2.40 a barrel, PVM said. This regrade is the lowest so far this month, indicating it is becoming less profitable to produce aviation fuel over diesel.

Fuel Oil

Hin Leong Trading Pte bought two 20,000-ton cargoes of 380- centistoke fuel oil in Singapore, according to the Bloomberg survey. The closely held trader paid $8.50 a barrel over October quotes to Vitol and Lukoil OAO to load between Oct. 27 and Oct. 31.

Fuel oil’s discount to Dubai crude narrowed 74 cents to $3.49 a barrel at 6:18 p.m. Singapore time, based on PVM data. That’s the smallest gap in four days, signaling reduced losses for refiners turning crude into residual products.

The premium of 180-centistoke fuel oil to 380-centistoke grade gained 50 cents to $8.25 a ton, the highest since Sept. 26, PVM said. A widening viscosity spread means higher-quality fuel oil has climbed less than bunker, or marine fuel.

--Editor: Christian Schmollinger, 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: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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