Asian oil products swaps

Swaps in the Far East have become the main hedging mechanism where there are no futures exchanges for a particular product or crude. Reportedly up to 70-80% of the total volume of trade in Singapore now centres on swaps.

Most product swaps trade two to six weeks forward and are priced over a five day average using Platts mean FOB Singapore (also referred to as MOPS, that is Mean Of Platts Singapore).

Naphtha: Swap traders price off the Platts FOB singapore naphtha quotation and the C+F Japan physical quotation. C+F Japan swaps trade 45 to 75 days forward. Gasoline/naphtha spreads are traded using the differential between the two Platts FOB Singapore quotations.

Jet/Gasoil: Jet and gasoil trade on a monthly, quarterly and calendar year basis. Time spreads are popular such as 3rd quarter 2001 against 1st quarter 2002. Jet/Gasoil swap spreads trade based on the differential between the two products.

Fuel Oil: 380 and 180 cst fuel trade on a monthly, quarterly and calendar year basis. In the past, swap trade could be offset by the SIMEX fuel contract, but that contract is now dormant.