Bloomberg News

Asia Naphtha Crack Shrinks; Vitol Sells More Fuel: Oil Products

May 11, 2012

Asia’s naphtha crack spread shrank to the narrowest in more than five months, signaling reduced profit for refiners. Vitol Group sold fuel-oil cargoes for a fourth day in Singapore, the region’s largest oil-trading center.

Light Distillates

The premium of Japan naphtha to London-traded Brent crude futures fell to $68.90 a metric ton at 5:02 p.m. Singapore time from $70.69 yesterday, according to data compiled by Bloomberg. This crack spread, a measure of processing profit, is the narrowest since Dec. 6. It is down 27 percent so far this week.

Vitol bought two 50,000-barrel cargoes of 92-RON gasoline in Singapore, according to a Bloomberg News survey of traders who monitored transactions on the Platts window. It purchased one shipment for May 31 to June 4 loading from Royal Dutch Shell Plc at $120 a barrel and paid $120.50 a barrel to Mercuria Energy Ltd. to load from May 26 to May 30.

Fuel Oil

Vitol sold two 20,000-ton cargoes of 380-centistoke fuel oil to BP Plc at $666 a ton for June 6-10 loading, according to the Bloomberg survey. The Swiss trader sold a similar shipment to Brightoil Petroleum Holdings Ltd. at $667 a ton for June 1 to 5 loading. It has sold at least 180,000 tons in Singapore since May 8.

Fuel oil was at a discount of $4.76 a barrel to Asian benchmark Dubai crude at 2:06 p.m. Singapore time, according to data from PVM Oil Associates Ltd., a broker. The difference is set to widen the most since the week ended March 9, indicating bigger losses for refiners turning oil into residual products.

The premium of 180-centistoke fuel oil to 380-centistoke grade fell 75 cents to $8.50 a ton, PVM said. That’s the narrowest viscosity spread since Nov. 3, meaning bunker, or marine fuel, has outpaced gains for higher-quality fuel oil.

Middle Distillates

PetroChina Co. sold 210,000 barrels of gasoil, or diesel, with 10 parts-per-million of sulfur from BP for May 27 to May 31 loading, according to the Bloomberg survey. The cargo changed hands at $3.10 a barrel over benchmark quotes. Shell bought 150,000 barrels of the same grade, also known as ultra-low- sulfur diesel, from ConocoPhillips at a $3 premium.

Trafigura Beheer BV purchased two gasoil cargoes with 0.5 percent sulfur for May 26 to May 30 loading, the survey showed. The company paid 20 cents a barrel below benchmark quotes to a unit of SK Innovation Co. for 150,000 barrels and 20 cents below May prices to Glencore International Plc for 250,000 barrels.

Gasoil’s premium to Dubai crude was at $16.40 a barrel at 2:06 p.m. Singapore time, PVM data showed. This crack spread has narrowed 2.8 percent this week and is poised for a second weekly decline.

Jet fuel’s premium to gasoil was unchanged after rising to 75 cents a barrel, PVM said. This regrade is up 50 percent from last week, showing it has been more profitable to make aviation fuel over diesel.

BP sold 100,000 barrels of jet fuel to Hin Leong Trading Pte for May 26 to May 30 loading, according to the survey. The cargo changed hands at 30 cents a barrel below benchmark quotes.

Refinery News

Honam Petrochemical Corp. completed the expansion of its Yeochun naphtha plant, boosting annual capacity to 1 million tons from 750,000 tons, according to a company statement. The company becomes the biggest ethylene maker in South Korea.

JX Nippon Oil & Energy Corp. plans to announce details of an additional refining capacity cut in the second half of fiscal year 2012 that will end March 2013, said Mitsunori Takahagi, the president of parent company JX Holdings Inc. The refiner will shut 200,000 barrels a day of capacity by March 2014, adding to 400,000 barrels a day it reduced previously.

Chinese refiners cut oil processing in April to 9.03 million barrels a day, the slowest rate since October, according to Bloomberg calculations from a statement by the National Bureau of Statistics. The 36.96 million tons processed is 0.3 percent less than a year earlier.

Tenders

Trafigura bought 55,000 tons of 95-RON gasoline from Essar Oil Ltd. for June loading from Vadinar, according to three traders who declined to be identified because the information is confidential. The Amsterdam-based trader received a discount of about 90 cents a barrel to Singapore prices.

Litasco SA bought 40,000 tons of gasoil with 0.5 percent sulfur from Mangalore Refinery & Petrochemicals Ltd. for June loading from New Mangalore, said two traders who asked not to be identified because the information is confidential. The unit of OAO Lukoil paid a premium of $1.50 to $2 a barrel to Middle East prices.

BP bought 36,000 tons of jet fuel from Mangalore Refinery for June loading, according to two traders who declined to be identified because the information is confidential. The Indian refiner gave a discount of 50 cents to $1 a barrel to Singapore prices.

Mangalore Refinery offered to sell 35,000 tons of naphtha cargo for June loading, the company said in a document e-mailed to potential buyers.

To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net; Winnie Zhu in Singapore at wzhu4@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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