Asian oil product swaps fell on Monday, but the fuel oil crack firmed, on positive sentiment that November supplies from the West will be lower than the monthly average. November fuel oil swaps fell by $5.38 to $286.50 a tonne, while the November/December contango fell to $6.13 a tonne from $6.00 at the previous close.
The product's November crack rose 50 cents from the previous close to minus $12.50 a barrel. Traders expect tight supply due to low Western inflows, with about 1.5-1.6 million tonnes expected in November versus the year-to-date monthly average of 2.53 million tonnes. News that South China would import about 30 percent less fuel oil in October versus September due to poor demand for straight-run parcels pressured the market.
November gas oil fell by $1.60 to $70.30 a barrel, with the November/December contango steady from the previous close at 50 cents. The product's November crack spread fell 20 cents to $13.80, as overall demand from top buyers Indonesia and Vietnam waned for high-sulphur gas oil for next month.
But gas oil may find some support for December, as Indonesia plans to boost its gas oil imports to 5.5 million barrels from the November import volume of 4.8 million barrels
November regrade value - the differential between jet fuel and gas oil - rose 15 cents to $3.15 a barrel on weak gas oil, while the November/December contango narrowed to 60 cents from 65 cents at the previous close.
But traders said physical jet fuel demand from China would remain thin, while stocks in Japan remain higher than a year-ago levels, which should weaken the regrade.
November naphtha swaps fell by $1.25 to $55.70 a barrel, while the November/December contango widened by 5 cents to 60 cents. The ICE Brent/naphtha crack - the premium paid for naphtha against Brent crude prices - held steady at $67 a tonne for first-half December.
Market sentiment remains weak on surplus naphtha exports from India, while demand stays thin as South Korean's SK Corp has been running its naphtha cracker below 50 percent after an unplanned maintenance. US December crude was down 22 cents to $59.11 a barrel by 0423 GMT, while Brent was down 10 cents to $59.58.
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