Asia Fuel Oil Rises Ninth Week; Gasoil Crack Drops: Oil Products

Asia fuel oil rose for the ninth week, the longest gaining streak since May 2004, as demand for power-generation fuels increased in Japan following the March 11 earthquake. Naphtha refining margins climbed, while gasoil profits declined.

Fuel Oil

Benchmark 180-centistoke fuel oil rose 0.5 percent to $655.20 a metric ton, gaining for the ninth week, according to data compiled by Bloomberg. That’s the longest stretch since May 21, 2004. The price of 380-centistoke fuel oil, mainly used as marine fuel, advanced 0.4 percent this week to $639.50 a ton.

Fuel oil’s discount to Dubai crude, or the crack spread, shrank 11 percent to $7.87 a barrel this week, Bloomberg data showed. The viscosity spread, or the premium of 180-centistoke fuel oil to 380-centistoke fuel oil, climbed 45 cents to $15.70 a ton.

Light Distillates

Open-specification naphtha for delivery to Japan rose 1.5 percent this week to $995 a ton, the first gain since March 4, according to Bloomberg data.

The premium of Japan-delivered naphtha to Brent, or the crack spread, rose to $124.15 a ton from $109.67 a ton at the end of Asian trading March 18, Bloomberg data showed.

Benchmark 92-RON gasoline rose for the second week, gaining 0.5 percent to $120.45 a barrel. Gasoline’s premium to naphtha fell 90 cents this week to $11.60 a barrel, Bloomberg data showed. A narrower reforming margin means the profit from turning naphtha into gasoline is falling.

Royal Dutch Shell Plc bought 50,000 barrels of 97-RON gasoline loading April 18 to April 22 from PetroChina Co. at $123.90 a barrel and purchased a second similar cargo of 97-RON from the Chinese refiner at $124 a barrel. Vitol Group sold 50,000 barrels of 92-RON gasoline loading April 14 to April 18 to Arcadia Petroleum Ltd. at $120.50 a barrel.

BP Plc bought 25,000 tons of naphtha for second-half May delivery from Vitol Group at $997 a ton. Noble Group bought a similar naphtha cargo from Koch Industries Inc. at $997 a ton.

Middle Distillates

Gasoil, or diesel, with 0.5 percent sulfur, fell 1.1 percent this week to $132 a barrel, according to Bloomberg data. Jet fuel dropped 0.9 percent to $133.55 a barrel.

Gasoil’s premium to Dubai crude fell 4.4 percent this week, the most since Feb. 25, to $22.55 a barrel, Bloomberg data showed.

Jet fuel’s premium to gasoil rose 30 cents to $1.55 a barrel this week, Bloomberg data showed. A wider regrade means it’s more profitable to produce aviation fuel over diesel.

Cargill Inc. bought 150,000 barrels of gasoil with 500- parts-per-million of sulfur from PetroChina at a premium of $2.90 a barrel over prices of gasoil with 0.5 percent sulfur. The cargo was for loading April 20 to April 24.

China International United Petroleum & Chemical Corp., or Unipec, bought 150,000 barrels of gasoil with 0.25 percent sulfur from Vitol at a premium of $1.40 a barrel over prices of gasoil with 0.5 percent sulfur. The cargo was for loading April 20 to April 24.

Unipec also bought 150,000 barrels of gasoil with 0.5 percent sulfur loading April 9 to April 13 from Shell at parity to Platts prices.

Hin Leong bought 100,000 barrels of jet fuel loading April 14 to April 18 from Shell at a premium of 30 cents over Platts prices.

(Source: http://www.bloomberg.com/news/2011-03-25/asia-fuel-oil-rises-ninth-week-gasoil-crack-drops-oil-products.html)