Asia Naphtha Crack Slips; Fuel-Oil Discount Widens: Oil Products

Author: Spencer Ogden
Date posted08/Dec/2011
Author: Spencer Ogden

Asia’s naphtha crack spread narrowed.Fuel oil’s discount to crude widened, signaling refiners’ losses from turning oil into residual products are growing.

Light Distillates

Naphtha’s premium to London-traded Brent crude futures fell to $75 a ton from $85 a ton at the end of Asian trading yesterday, according to data compiled by Bloomberg.

Japan’s open-specification naphtha forward contracts for second-half January delivery were bid at $909 a ton against offers at $912, based on data from Ginga Petroleum Singapore Pte, a broker. The petrochemical feedstock closed yesterday at $919.75. Prices have gained for eight days, the longest rising streak since April.

Gasoline’s premium to naphtha yesterday dropped to $12 a barrel, the lowest since May 27, Bloomberg data showed. A narrower reforming margin indicates it is less profitable to produce motor fuel.

Middle Distillates

The premium of gasoil, or diesel, to Asian marker Dubai crude fell 37 cents to $18.58 a barrel, according to PVM Oil Associates Ltd., a broker. This crack spread narrowed for the third time in four days.

Gasoil swaps for January dropped $1.35, or 1.1 percent, to $125.10 a barrel, PVM said. That’s the largest decline since Nov. 21. Jet fuel’s premium to gasoil lost 15 cents to 95 cents, the lowest so far this month. A narrower regrade shows it is less profitable to make aviation fuel over diesel.

Fuel Oil

Fuel oil’s discount to Dubai crude widened 14 cents to $6.14 a barrel, according to PVM. That’s the biggest gap since Sept. 14.

January high-sulfur fuel oil swaps decreased $7.25, or 1.1 percent, to $652.50 a ton, based on PVM data. Prices are the lowest since Nov. 22. The premium of 180-centistoke fuel oil to 380-centistoke grade, or the viscosity spread, was unchanged after climbing to $14.25. This means bunker, or marine fuel, moved in tandem with higher-quality fuel oil.