Gasoil East-West Spread at Widest in 18 Months on European Demand: Wrap
Asia gasoil prices were at the deepest discount to European levels in more than 18 months, opening up the chance for traders to move shipments to Europe to help meet heating-fuel demand.
The East-West gasoil spread for October widened to a discount of $20 a barrel, according to data from broker PVM Oil Associates. That’s the widest since March 4, 2009, indicating it’s profitable to move cargoes to Europe from Asia.
Gasoil futures for October traded on the ICE Futures Europe exchange are at a $2.75 a metric ton premium to the November contract, a market situation known as backwardation and one that indicates prompt demand is high. The premium is at the widest since Sept. 16.
Gasoil processing profits for Asia declined 21 cents to $12.18 a barrel at 11:03 a.m. Singapore time, according to data from broker PVM Oil Associates. Gasoil swaps rose 60 cents to $88.70 a barrel as oil-product prices gained in tandem with crude oil.
Oil traded near a two-week high in New York as signs of renewed equipment purchases by factories and businesses boosted traders’ expectations of fuel demand.
Swaps for fuel oil gained $2.50 to $454 a ton, data from PVM showed. Fuel oil’s discount to Dubai crude widened to $6.67 a barrel from $6.25 a barrel on Sept. 24.
Open-specification naphtha cargoes delivered in the second half of November were bid at $686.50 a ton against offers at $689.50 a ton at 10:14 a.m. Singapore time, according to data from Ginga Petroleum Singapore Pte. First-half December lots were bid at $688 to offers at $691 a ton.
Prices of naphtha for delivery between mid-November and mid-December were at $682 a ton on Sept. 24, according to data compiled by Bloomberg.
Saudi Arabian Oil Co. sold 55,000 tons of naphtha for loading on Oct. 14 to Oct. 16 from Ras Tanura port, traders said. The shipment was probably sold at a premium of $5 to $6 a ton to Middle East prices, they said.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
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