Singapore regrade softens
May 16, 2012 -- The Singapore front-month regrade swap--which measures the premium jet fuel commands over gasoil--continued to weaken, down 34 cents to 55 cents/barrel on Wednesday, as the gasoil market received demand support from Vietnam.
The physical regrade also fell to 35 cents/b from 80 cents/b.
Major Vietnamese importers are seeking additional prompt cargoes of gasoil and gasoline, following the shutdown of the country's sole 6.5 million mt/year refinery at Dung Quat.
But Vietnamese demand for jet fuel has not yet emerged, traders said.
The Singapore jet fuel outright price fell 85 cents from Tuesday to $123.25/b and has shed more than $10/b since May 2, reflecting the weak market and the fall in crude.
The June jet/Dubai crack swap gained 10 cents to $16.53/b, after a sharp fall on Tuesday.
This was in contrast to the better values seen on the jet crack in the past two weeks.
"The recent improvements in the jet crack compared with the past months have prompted refiners to produce more jet fuel," one trader said, which could be adding pressure to the jet market.
In tenders, the Philippines' Petron Corp has awarded a tender for 160,000 barrels of jet fuel for first-half June delivery, but details were not immediately available.
Traders said that the Philippines is importing jet fuel and gasoil due to shutdowns at the Petron and Shell Philippines refineries, but this could not be immediately confirmed.
Abu Dhabi National Oil Company has agreed with at least one buyer a higher price of a $2.05/barrel premium to the Mean of Platts Arab Gulf jet assessments for its July 2012 to June 2013 jet fuel term cargoes.
This was up from the $1.95/b premium it had concluded for the year-ago period and was about 5 cents above its January-December 2012 contract.
Traders said the higher price could be due to ADNOC agreeing to ship the cargoes in long-range 2 tankers and saving on freight costs.
Europe extends losses
A fresh day of falls inched the Platts CIF NWE and FOB Rotterdam assessments towards the $1,000/mt level Wednesday, with both the underlying ICE gasoil contract and premiums giving further ground.
The FOB Rotterdam barge premium eased 75 cents to $75.25/mt over the front-month gasoil contract, an outright price of $1,007/mt.
Cargoes saw the same move, with premiums slipping to $77.25/mt over the front-month contract.
The moves came as healthy refinery margins and little incentive to store ensured that flows remained steady, as did buying interest.
"The market is relatively tight in the prompt; stock levels are quite low," one trader said, while the return of refining capacity in Asia brought the promise of improved flows from that region.
"In June you can expect arbitrage cargoes, and that potential is weighing on the June swap volumes...Asian refineries are coming out of turnaround season," the trader continued, with the move sparking some possible fresh jet tanker fixtures out of South Korea.
The backwardated structure of the ICE 0.1% gasoil contract kept stocks low, and without that cushion of oil that many in the market grew accustom to through 2009 into 2011, premiums were likely to continue to show some resilience, despite the ongoing poor end-user demand.
In the Platts Market on Close assessment process, Shell scooped up another cargo, bringing their buying to close to 200,000 mt, when the major lifted an offer from Vitol into CIM Le Havre.
The offer had reached the average of June 6-10 plus $2.50/mt at the time of the trade.
For barges, just over 7,000 mt of jet changed hands with Shell and Morgan Stanley buying from Statoil and BP mostly around prompt dates at prices around June plus $75/mt.
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