Singapore 0.5% sulfur gasoil cash differential flips into discount
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
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, email@example.com
--Edited by Deepa Vijiyasingam, firstname.lastname@example.org