Bloomberg News

Asia Naphtha Set to Rebound; Gasoil Crack Slides: Oil Products

October 19, 2011

Oct. 19 (Bloomberg) -- Asia naphtha derivative contracts were poised to rebound from the lowest in a week. Gasoil’s crack spread narrowed, signaling decreasing profit for refiners making the distillate fuel.

Light Distillates

Japan’s open-specification naphtha forward contracts for second-half November delivery were bid at $916 a metric ton against offers at $919 at 12 p.m. Singapore time, according to data from Ginga Petroleum Singapore Pte, a broker. Yesterday, the petrochemical feedstock closed at a one-week low of $904.

Naphtha’s premium to London-traded Brent crude futures was up $1.21 at $67.80 a ton, based on data compiled by Bloomberg. This crack spread, a measure of processing profit, has shrunk 47 percent so far this month.

Gasoline’s premium to naphtha yesterday declined to $23.40 a barrel, the lowest since Oct. 5, Bloomberg data showed. A narrower reforming margin means it is less profitable to produce motor fuel.

Middle Distillates

The premium of gasoil, or diesel, to Asian marker Dubai crude fell 31 cents to $15.82 a barrel, according to PVM Oil Associates Ltd., a broker. This crack spread narrowed for the second time in three days.

Gasoil swaps for November rose $1.50, or 1.2 percent, to $122.70 a barrel, PVM data showed. Jet fuel’s premium to gasoil climbed 5 cents to $3.05. This regrade was the highest since Feb. 23, indicating it is more profitable to make aviation fuel over diesel.

Fuel Oil

Fuel oil’s discount to Dubai crude widened 77 cents to $5.19 a barrel, according to PVM. The gap increased for the first time in three days, signaling losses are growing for refiners turning oil into residual products.

November high-sulfur fuel oil swaps advanced $6.75, or 1 percent, to $661 a ton, PVM said. The premium of 180-centistoke fuel oil to 380-centistoke grade was unchanged after slipping to $7.50. A narrower viscosity spread shows bunker, or marine fuel, gained more than higher-quality fuel oil.

--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: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.


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