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Asia Fuel Oil, Gasoil Snap Three-Day Rally; Cracks Decline: Oil Products

Asia fuel oil and gasoil swaps snapped a three-day rising streak as crack spreads narrowed in Singapore, Asia’s biggest oil-trading center, signaling reduced processing profit.

Benchmark crude futures fell from a 26-month high above $89 a barrel in New York as traders sold contracts to secure profits after prices surged 6.5 percent last week.

Fuel Oil

High-sulfur fuel oil swaps for January dropped $3.50, or 0.7 percent, to $510.50 a metric ton at 11:45 a.m. Singapore time, according to data from PVM Oil Associates, a brokerage. The product’s discount to Dubai crude, the Asian bellwether, gained 1 cent to $9.05 a barrel, indicating losses from making the residue remained the most since March 2009.

The premium of 180-centistoke fuel oil to 380-centistoke grade was unchanged after rising to $10 a ton, PVM said. This viscosity spread was the widest in three weeks, meaning bunker, or marine fuel, has risen less than higher-quality fuel oil.

Middle Distillates

January gasoil, or diesel, swaps fell 63 cents, or 0.6 percent, to $102.32 a barrel, according to PVM. The premium to Dubai crude, a measure of refining gains, decreased 9 cents to $14.73 a barrel. This crack spread yesterday reached $14.82, the widest since January 2009.

Jet fuel’s premium to gasoil was down 5 cents at $1.15 a barrel, a two-week low, based on PVM data. A narrowing regrade signals it’s less profitable to produce aviation fuel compared with diesel.

Naphtha

Japan’s benchmark open-specification naphtha forward contracts for second-half January delivery were bid at $848.50 a ton against offers at $851.50, according to Ginga Petroleum Singapore Pte, a broker. That’s little changed from yesterday’s close of $849, which was the highest since September 2008.

Naphtha’s crack spread to Brent crude added $1.13 to $161.15 a ton, the highest in a week, according to data compiled by Bloomberg.

Gasoline’s premium to naphtha yesterday climbed to $8.30 a barrel, the strongest since Aug. 6, Bloomberg calculations showed. A widening reforming margin shows motor fuel is more profitable compared with naphtha.

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

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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