Asian middle distillates nudged lower on Monday but gas oil's crack values widened as the full swing of refinery maintenance strained supplies. The session posted a sole trade, with 100,000 barrels changing hands between seller Vitol and buyer Morgan Stanley at a discount of 70 cents a barrel to spot quotes for loading on May 22-26.
The discount level stretched from minus 40 cents fetched in a past deal. A cargo of 0.005 percent gas oil was offered at a premium of $3.70 a barrel for loading on May 22-26 and a second offer for a similar parcel stood at plus $4.10 for early-June lifting. A lone bid for 0.5 percent was made at a discount of 30 cents.
Gas oil last traded at $4.70 a barrel premium. On swaps, gas oil's May/June spread held steady at parity and the May crack over Dubai strengthened to $16.55 a barrel from $15.91 on Friday.
The market was buoyed by rising demand from India, where Hindustan Petroleum Corp bought by tender 270,000 tonnes of low-sulphur gas oil for June to August delivery. The volume, equivalent to 90,000 tonnes of monthly imports, was up from 60,000 tonnes bought for each of April and May.
"Yes, the low-sulphur market is getting tighter and prices are reflecting the strength," said a trader in Singapore. Premiums of low sulphur gas oil rose to $2.00 a barrel on a Northeast Asia basis from $1.50 a month ago. Jet-kerosene was also supported by a tighter flow of supply, as some refiners diverted the product for petrochemical use.
The tender from Taiwan's CPC Corp mirrored a firmer market. CPC sold 30,000 tonnes of jet fuel at stronger prices for June versus a past tender in May. The price rose to a premium of 40-50 cents a barrel from a discount of 20-40 cents.
Lower shipments from rival Formosa Petrochemical Corp also supported the market. Formosa skipped spot jet fuel shipments in May as it did last month despite the completion of a refinery turnaround, limiting exports to 60,000 tonnes of term supply. However, the strength of gas oil reined in regrade values. The May contract was 50 cents narrower from Friday to $2.40 a barrel.
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