Bloomberg News

Naphtha Crack Set to Fall; Hin Leong Buys Gasoil: Oil Products

February 03, 2012

Feb. 3 (Bloomberg) -- Asia’s naphtha crack spread is set to narrow for the first week in five, signaling reduced profit for refiners. Hin Leong Trading Pte bought gasoil cargoes in Singapore, the region’s largest oil-trading center.

Light Distillates

Naphtha’s premium to London-traded Brent-crude futures dropped to $117.40 a metric ton at 3 p.m. Singapore time from $115.91 yesterday, according to data compiled by Bloomberg. This crack spread, a measure of refining profit from the petrochemical feedstock, has narrowed 12 percent this week and is poised for the first decline in five weeks.

Glencore International Plc sold open-specification naphtha for a fourth day, based on a Bloomberg News survey of traders who monitored transactions on the Platts window. The company sold 25,000 tons for first-half April delivery to Cargill Inc. at $980 a ton and a similar volume for the same period to Vitol Group at $981 a ton. Mabanaft GmbH & Co sold 25,000 tons of naphtha for second-half April delivery to Mercuria Energy Ltd. at $974 a ton.

Trafigura Beheer BV, the biggest reported buyer of 92-RON gasoline in Singapore this month, purchased 50,000 barrels from Gunvor Group Ltd. at $122.70 a barrel. Total SA sold two 50,000- barrel cargoes to Gracewood International Ltd. at $122.70 a barrel. The Paris-based refiner also sold 50,000 barrels of 95- RON grade to Gracewood at $124.90 a barrel.

BP Plc bought 50,000 barrels of 95-RON gasoline from ConocoPhillips at $125.70 a barrel and purchased a similar-sized cargo of 97-RON grade from PetroChina Co. at $128.20 a barrel, the survey showed. The Chinese refiner also sold 50,000 barrels of 97-RON to Royal Dutch Shell Plc at $128.10 a barrel.

Middle Distillates

Hin Leong bought 250,000 barrels of gasoil, or diesel, with 0.5 percent sulfur from BP at 25 cents a barrel over benchmark quotes, according to the Bloomberg survey. The cargo is for the earliest loading period of Feb. 18 to Feb. 22. Hin Leong also purchased 150,000 barrels from PetroChina Co. at a 40-cent premium, for Feb. 22 to Feb. 26.

Shell sold 150,000 barrels of gasoil to Trafigura Beheer BV at 30 cents a barrel over quotes for Feb. 18 to Feb. 22 loading, the survey showed. The two companies made a similar transaction yesterday.

Gasoil’s premium to Asian marker Dubai crude rose 20 cents to $18.14 a barrel at 2:39 p.m. Singapore time, based on data from PVM Oil Associates Ltd., a broker. This crack spread is set to widen for a second week.

Jet fuel was unchanged for a second day at 10 cents a barrel below gasoil, PVM data showed. This regrade has been negative since Jan. 16, indicating it is unprofitable to produce aviation fuel over diesel.

Chevron Corp. bought 100,000 barrels of jet fuel from Morgan Stanley at 30 cents a barrel above quotes, the survey showed. That’s the first premium reported since Nov. 3.

Fuel Oil

Fuel oil fell 2 cents to $2.56 a barrel below Dubai crude at 2:39 p.m. Singapore time, according to PVM data. That’s the biggest discount since Jan. 9, signaling losses for refiners turning oil into residual products.

The premium of 180-centistoke fuel oil to 380-centistoke grade dropped 50 cents to $9.50 a ton, the lowest since Nov. 9, PVM said. This viscosity spread is set to narrow for a third week, meaning bunker, or marine fuel, declined less than higher- quality fuel oil.

Refinery News

SK Innovation Co., which owns South Korea’s biggest oil refiner, plans to shut two crude-distillation units at its Ulsan plant for maintenance, according to a company statement. The 240,000-barrel-a-day No. 4 unit will close for 34 days from March 20 and the 110,000-barrel-a-day No. 2 facility will be idled for 30 days from Oct. 11.

Cosmo Oil Co. will begin taking safety inspections at its No. 2 crude-distillation unit by the local authorities at its Chiba refinery near Tokyo, said spokesman Katsuhisa Maeda.

Tenders

Idemitsu Kosan Co. bought 35,000 tons of naphtha for February loading from Bharat Petroleum Corp. at about $33 a ton above Middle East prices, said two traders.

Bharat Petroleum offered to sell 35,000 tons of naphtha for March loading from Kochi, according to a tender document.

Ceylon Petroleum Corp. bought gasoil and jet fuel from Daewoo Group for February delivery, said a company official. Sri Lanka’s state-owned company paid $3.14 a barrel over Singapore prices for gasoil and a $2.84 premium for jet fuel.

--With assistance from Pratish Narayanan in Mumbai. Editor: Christian Schmollinger, Mike Anderson.

To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net


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