Asia Oil Swaps-Gasoil spreads firm on tight supply, trade brisk

Gasoil timespreads continued to firm in brisk trade on Thursday due to tight physical supply, with some players seen taking long positions in the London Gasoil (LGO) Exchange of Futures for Swaps (EFS) and the September/October timespread.
Early naphtha trade was subdued, with prompt timespreads weaker on expectations of large Western inflows in September, though fourth quarter 2012/2013 timespreads remained firm on hopes for demand.
Fuel oil timespreads were generally weaker through the 12-month forward curve due to weak sentiment and poor demand in the physical market. The front-month September Brent/Dubai EFS was valued at $5.42 per barrel.
Fixed-price swaps for fuel oil and gasoil were higher following a $2.75 per barrel surge in September Brent crude by 0430 GMT from Wednesday's Asian close. The September Brent crude contract is due to expire on Thursday.
GASOIL TIMESPREADS STRONG ON DEMAND, TRADER SENTIMENT
Gasoil timespreads were firm on Thursday amid robust demand for physical cargoes and strong trader sentiment.
The newly prompt September/October timespread for gasoil was valued 23 cents per barrel higher at a $1.10 backwardation, while the October/November timespread was up 15 cents at a 75 cents per barrel backwardation.
Traders and brokers estimated that over 1 million barrels of the September/October timespread, the September EFS and the October EFS were traded on Thursday as traders began taking long positions on tight supply and on opportunities for arbitrage in selling jet fuel to the United States.
The September and October regrades were marginally lower at 87 cents and $1.25 per barrel. The November regrade inched up 5 cents a barrel to $1.55.
The September gasoil crack was 34 cents lower at a $18.61 per barrel premium to Dubai. The October crack was 48 cents weaker at $18.09 a barrel over Dubai.
Gasoil's fixed-priced September and October swaps were valued at $129.48 and $128.38 respectively, up $2.25 and $2.02 per barrel.
FUEL OIL TIMESPREADS WEAK ON LACKLUSTRE DEMAND
Asia's fuel oil timespreads remained in a downtrend on Thursday because of lacklustre demand in the physical market. Appetite for marine bunker fuels was also weak despite previous expectations of a lack in high density blending components.
"Demand is really bad at the moment. Even without sufficient quantities of blending material, we still have more than enough bunker to go around for everybody," said a Singapore-based bunker trader.
Sentiment was also poor among traders who are expecting a bull play by Total during Asian trading hours to end soon. The oil major has been buying fuel oil swaps in the Asian trading window and has picked up at least 375,000 tonnes worth of fixed-priced 180 cst, 380 cst and timespreads.
"Seems like they have run out of steam," said a Singapore-based fuel oil trader.
The September/October timespread was 25 cents weaker at a $2.63 per tonne backwardation, while the October/November timespread inched down 13 cents to a $2.50 per tonne backwardation.
The September crack was 5 cents lower at a $6.18 per barrel discount to Dubai and the October crack was 8 cents weaker at a $6.00 per barrel discount to Dubai.
September and October fixed-price contracts for 180 cst were valued at $680.50 and $677.88 per tonne respectively, $16.50 and $16.75 higher.
The September and October viscosity spreads were marginally higher at $13.00 and $12.50 respectively.
PROMPT NAPHTHA SPREADS WEAKER ON HIGH SEPT WESTERN INFLOWS
Prompt naphtha timespreads were weak on Thursday due to expectations for high volumes of Western inflows in September coupled with prevailing demand uncertainty among petrochemical makers because of high Brent crude.
Asia is expected to receive about 800,000 tonnes of Western naphtha in September, the highest volume in five months.
The September/October timespread was 38 cents weaker at a $4.25 per tonne backwardation, while the October/November timespread fell 50 cents to a $4.50 per tonne backwardation.
The fourth quarter 2012/first quarter 2013 timespread inched down 67 cents to a $15.50 per tonne backwardation. The first quarter 2013/second quarter 2013 timespreads also dropped 67 cents to a $17.17 per tonne backwardation.
The CFR September crack gained 17 cents to a $9.15 per barrel discount to Brent. The October crack also rose 26 cents to a $7.68 per barrel discount to Brent.
The CFR fixed-price September contract was $26.25 per tonne higher at $964.25, while the FOB September swap rose $3.00 per barrel to $105.00.
Source: Reuters