Asian oil product swaps fell on Tuesday in line with US crude futures but tight regional supply kept gas oil's crack spreads steady. May gas oil fell $1.25 a barrel from Monday's close to $85.15 but the May/June backwardation held at a robust $1.80 a barrel.
The May crack spread over Middle East Dubai crude was steady at $18.18 a barrel despite lower crude. India has been buying much low-sulphur gas oil, fuelling demand in Asia where supplies have been made tight due to heavy plant turnarounds and incessant outflows to Africa.
Hindustan Petroleum Corp Ltd bought 50,000 tonnes of diesel for delivery between May and early June, and is looking to import a similar cargo on a prompt basis.
May regrade, or the spread between jet-kerosene and gas oil, widened 10 cents to $3.20 a barrel. May fuel oil lost $4 a tonne from Monday to $358, paring a strong gain of $8.88 the previous session. The May/June backwardation was quoted at 50 cents a tonne while the May crack to Dubai narrowed to minus $11.85 a barrel from minus $12.50.
Despite the slight improvement, the crack levels were deemed poor as high outright prices have kept Chinese players on the sidelines. Any form of buying was seen on a hand-to-mouth basis.
Demand from Vietnam has also weakened. Petrolimex wrapped up its second-quarter fuel oil tender, buying 16 percent lower than the previous quarter at 300,000 tonnes.
May naphtha dropped to $65.20 a barrel from $66.70 a day ago. Poor demand sentiment dogged the market in the face of a heavy cracker maintenance schedule.
Taiwan's CPC cut operation rates at two of its three crackers to 80 percent of capacity due to technical problems, while three Indian refiners - ONGC, IOC and BPCL - are offering by their individual tenders nearly 100,000 tonnes of naphtha for May loading.
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