November 8, 2012 / 5:32 AM / 5 years ago

Asia Oil Swaps-Fuel oil spreads rebounds on bargain buying

(For 12-month forward curve, click )
    SINGAPORE, Nov 8 (Reuters) - Fuel oil inter-month timespreads were mostly
stronger throughout the 12-month forward curve as traders were seen buying after
weeks of decline in prices. However, fundamentals remained weak due to
lacklustre demand and a glut in supply.
    A weaker demand outlook from China teapot refiners also depressed sentiment
among traders. China's biggest operator of teapot refineries, ChemChina, is set
to win an annual crude import quota of 10 million tonnes starting from 2013,
according to industry sources. 
    A J.P. Morgan note said this could increase China's exports of light
products, while suppressing its fuel oil imports.
    Fuel oil's East-West (EW) spread, the differential between Asian and
European fuel oil prices, also dropped to a more than one-year low, according to
Reuters data, as traders sold the contract down to prevent more arbitrage
volumes that could exacerbate the current glut in supply.
    In naphtha, timespreads eased further but traders said fundamentals remained
strong as players were still willing to pay high premiums for November and
December shipments. Inter-month premiums were mostly weaker across the 12-month
forward curve.
    Gasoil timespreads were also weaker in early Thursday trade amid higher
supply and tepid demand. Regrade spreads were also lower as physical demand has
begun to taper off according to traders.
    Front-month December Brent futures dropped $3.16 per barrel to
$107.36 per barrel from Wednesday's Asia close. 
    For a full list of swaps trades: 
    Fuel oil's November/December timespread inched up 63 cents to a $3.25 a
tonne contango. The December/January contract was also 63 cents higher in a
$2.25 a tonne contango. 
    The January/February timespread also firmed 25 cents to a $1.25 cents a
tonne contango.
    The December crack was valued 62 cents narrower at a $9.63 discount to
Dubai. The January crack was also 50 cents narrower at a $8.63 discount to Dubai
    The November, December 180-cst fixed-price swaps were at $609.13 and $612.38
a tonne, down $14.88-15.50.
    Naphtha CFR Japan's November/December timespread was 75 cents lower at a
backwardation of $13.00. The December/January contract was 50 cents a tonne
weaker at a backwardation of $9.50.
    The CFR December crack was 37 cents wider at a discount of $6.89 and the
January discount was 42 cents wider at $7.12 per barrel to Brent crude.
    The CFR November swap dropped $32.50 to $917.25 per tonne, while the FOB
Singapore November swap lost $2.85 to $102.00 per barrel.
    Gasoil's November/December timespread was 9 cents lower in a backwardation
of 40 cents per barrel. The December/January contango is also 15 cents lower at
$1.50 per barrel. 
    The December crack rose 78 cents to a premium of $18.45, while the January
premium was 91 cents higher at $20.60 per barrel to Dubai crude.
    November's regrade, the spread between jet fuel and gasoil, was at a premium
of $1.15. The December premium stood at $1.07per barrel.
    November and December fixed-price contracts were at $122.69 and $122.29 per
barrel respectively, down $2.22-2.31.
 PRODUCTS                                 Price           Change   Pct Change
 NOVEMBER naphtha                         101.90/102.10   -2.85    -2.72
 DECEMBER naphtha                         100.05/100.25   -2.70    -2.63
 NOVEMBER naphtha                         917.13/917.38   -32.50   -3.42
 DECEMBER naphtha                         904.00/904.50   -31.75   -3.39
 NOVEMBER gasoil                          122.64/122.74   -2.31    -1.85
 DECEMBER  gasoil                         122.24/122.34   -2.22    -1.78
 NOVEMBER fuel oil                        609.00/609.25   -14.88   -2.38
 DECEMBER fuel oil                        612.25/612.50   -15.50   -2.47
 Product                                  Price           Change   
 NOVEMBER regrade                         1.10/1.20       -0.07    
 DECEMBER gasoil crack                    18.35/18.55     0.78     
 NOVEMBER 180/380 cst                     10.00/10.50     0.25     
 DECEMBER fuel oil crack                  -9.73/-9.53     0.62     
 DECEMBER jet fuel crack                  19.42/19.62     0.75     
 DECEMBER naphtha crack                   -6.99/-6.79     -0.37    
 Inter-month spread                       Mean             Prev    Change
 NOVEMBER/DECEMBER naphtha                1.85            2.00     -0.15
 NOVEMBER/DECEMBER naphtha (CFR           13.00           13.75    -0.75
 NOVEMBER/DECEMBER gasoil                 0.40            0.49     -0.09
 NOVEMBER/DECEMBER fuel oil               -3.25           -3.88    0.63
 (Reporting by Bohan Loh; Editing by Anand Basu)

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