Bloomberg News

Asia Naphtha Crack Spread Set for Weekly Gain: Oil Products

December 09, 2011

Dec. 9 (Bloomberg) -- Asia’s naphtha crack spread is poised for a weekly increase. Fuel oil extended a discount to crude, signaling widening losses for refiners turning oil into residual products.

Light Distillates

Naphtha’s premium to London-traded Brent crude futures climbed $6.03 to $104.78 a metric ton at 12 p.m. Singapore time, according to data compiled by Bloomberg. This crack spread, a measure of refining profit, has widened 59 percent from last week and is headed for the third gain in four weeks.

Japan’s open-specification naphtha forward contracts for second-half January delivery were bid at $894 a ton against offers at $897, based on data from Ginga Petroleum Singapore Pte, a broker. Yesterday, the petrochemical feedstock closed at $913.25, decreasing for the first time in 13 days.

Gasoline’s premium to naphtha yesterday dropped to $11.40 a barrel, the lowest since May 23, Bloomberg data showed. A narrowing reforming margin indicates it is less profitable to produce motor fuel.

Middle Distillates

The premium of gasoil, or diesel, to Asian marker Dubai crude slid 4 cents to $18.60 a barrel, according to PVM Oil Associates Ltd., a broker. This crack spread is poised to increase this week for the first time in four weeks.

Gasoil swaps for January fell $2.25, or 1.8 percent, to $123.60 a barrel, PVM said. Prices are set for a third weekly decline in four weeks. Jet fuel’s premium to gasoil lost 30 cents to 65 cents, the lowest so far this month. A narrowing regrade shows it is less profitable to make aviation fuel over diesel.

Fuel Oil

Fuel oil’s discount to Dubai crude widened 17 cents to $5.69 a barrel, according to PVM. The difference is set to widen for a second week.

January high-sulfur fuel oil swaps dropped $15, or 2.3 percent, to $645.50 a ton, based on PVM data. Prices are the lowest since Oct. 11. The premium of 180-centistoke fuel oil to 380-centistoke grade, or the viscosity spread, added 50 cents to $14.50. This means bunker, or marine fuel, fell more than higher-quality fuel oil.

--Editors: Mike Anderson, Ryan Woo.

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


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