Asian oil product swaps rebounded on Tuesday, prompted by overnight gains in US crude futures but the contangoes of both gas oil and naphtha widened on slowing regional demand and rising supply. August gas oil rose $1.20 from Monday to $86.20 a barrel, while its August/September contango widened 15 cents to 25 cents a barrel.
Gas oil failed to match up to crude gains amid weak fundamentals, with August crack spread over Middle East Dubai crude weakening to $16.53 a barrel from $16.87 a day ago.
If not for Hin Leong's physical buying support, the market would have stumbled further under the weight of heavy supplies and poor demand especially for low-sulphur grades. August regrade, or the spread between jet-kerosene and gas oil, widened 30 cents to $2.40 a barrel.
August naphtha gained $1.10 to $67.50 a barrel but its contango deepened 20 cents to 50 cents a barrel in the face of rising Indian supplies. On the other hand, demand was slowing on a heavy bout of cracker turnarounds from August through November. August fuel oil was quoted at $352.50 a tonne, up from $346.10 at Monday's close.
The August crack to Dubai widened to minus $15.44 a barrel from minus $14.50 a day ago, while the September crack stretched to a discount of $14.87 a barrel versus Monday's minus $14.20. US crude futures for September traded up 15 cents at $74.55 a barrel by 0349 GMT, having gained $1.16 in New York on Monday.
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