Singapore (Platts)--7Dec2012/338 am EST/838 GMT

The cash differential for FOB Singapore 0.5% sulfur gasoil flipped to a discount of 13 cents/barrel to the Mean of Platts Singapore Gasoil assessment at the Asian close Thursday, with the market pressured by ample stocks and weak demand.

The differential was assessed down 18 cents/b from Wednesday's close, and was last lower on July 3, when it finished at a discount of 9 cents/b to the MOPS Gasoil assessment.

The cash differential for gasoil represents the price buyers are willing to pay for the automotive and power generation feedstock, below or above benchmark prices published around the day a cargo loads. Falling physical differentials indicate a weak appetite from buyers and are typically accompanied by softness in the structure of the forward curve.

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Ample stocks and softer demand in Asia, particularly in the current quarter, has led to a decline in high sulfur gasoil prices. The cash differential for FOB Singapore 0.5% sulfur gasoil has been falling steadily since August 27, when it finished at a premium of $1.81/b -- a high for this year so far.

High sulfur gasoil buying from major regional consumers, such as Indonesia and Vietnam, has been weaker this quarter, with the countries heard having relatively high stock levels amid weak economic growth.

Indonesia's Petral, the trading arm of state-owned Pertamina, last sought 900,000 barrels of 0.35% sulfur gasoil for mid-November delivery into Indonesia. It is not clear if that tender was awarded and the company has not appeared in the spot market so far this month.

Meanwhile, Vietnam's largest oil products importer, Vietnam National Petroleum Corp., has not been seen importing spot gasoil in the current quarter, and has also not issued its usual quarterly term tender for October-December, Platts reported previously.

"[High sulfur gasoil] consuming countries are all very quiet," a Singapore based trader said Friday. "Also, the market of late has been quiet, which could be attributed to the year-end." Meanwhile, middle distillate stocks in Singapore soared by 1.551 million barrels week on week to 11.482 million barrels for the week ended December 5, according to data released Thursday by IE Singapore. This week's stock level is the highest since the week ended October 19 2011, when it stood at 12.449 million barrels.

During Thursday's Market on Close assessment process in Asia, oil major Shell offered 150,000 barrels of 0.5% sulfur gasoil at a discount of 10 cents/b to MOPS Gasoil assessments for loading over December 21-25 from Singapore, which remained at the close.

Shell also offered 250,000 barrels of FOB Singapore 0.5% sulfur gasoil for loading December 22-26 at a discount of 20 cents/b to MOPS Gasoil assessments, which was lifted by Trafigura. The latter also bought another 250,000 barrels of 0.5% sulfur gasoil from Hin Leong for loading December 21-25 from Singapore at January MOPS Gasoil assessments minus 90 cents/b, or the equivalent of MOPS Gasoil assessments minus 18 cents/b.

--Jonathan Nonis, jonathan_nonis@platts.com --Edited by Deepa Vijiyasingam, deepa_vijiyasingam@platts.com

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