Bloomberg News

Fuel-Oil Discount Shrinks; Gasoil Extends Decline: Oil Products

April 11, 2012

Fuel oil’s discount to crude narrowed in Asia, signaling reduced losses for refiners turning oil into residual products. Gasoil swaps entered the longest losing streak in 10 months.

Fuel Oil

Fuel oil rose 35 cents to $5.34 a barrel below Asian-marker Dubai crude at 11:15 a.m. Singapore time, according to data from PVM Oil Associates Ltd., a broker. That’s the smallest discount since March 5.

High-sulfur fuel oil swaps for May fell $9.50, or 1.3 percent, to $721 a ton, PVM said. Prices were down for a fifth day, the longest stretch since November. The premium of 180- centistoke fuel oil to 380-centistoke grade, or the viscosity spread, was unchanged for a second day at $11.25. This means bunker, or marine fuel, moved in tandem with higher-quality fuel oil.

Middle Distillates

Gasoil (PVMPSO1M), or diesel, swaps for May dropped $1.40, or 1.1 percent, to $132.05 a barrel, according to PVM. Prices are down for a fifth day, the longest losing streak since August.

Gasoil’s premium to Dubai crude climbed 41 cents to $15.79 a barrel, PVM said. This crack spread, a measure of refining profit, widened for the first time in six days. Jet fuel’s premium to gasoil gained 5 cents to 25 cents. This regrade has lost more than half its value in the past week, showing it is less profitable to produce aviation fuel over diesel.

Light Distillates

Naphtha (PVMPNA1M) swaps for May declined $14.75, or 1.4 percent, to $1,022.75 a metric ton, according to PVM. The petrochemical feedstock decreased for a fourth day, the longest run since January.

Naphtha’s premium to London-traded Brent crude futures fell $16.78 to $117.54 a ton, data compiled by Bloomberg showed. The difference is also known as the crack spread. Gasoline’s premium to naphtha yesterday dropped $1.15 to $17.90 a barrel, the lowest since March 26. A narrowing reforming margin indicates it is less profitable to produce motor fuel.

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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