Asian oil product swaps rallied on Friday, taking a cue from firmer crude, while the regrade improved on demand from Sri Lanka and a tight European market, traders said.
March gas oil was assessed at 73.00 dollars a barrel, up nearly $2 from Thursday, with the contango between March and April edging up by 10 cents to minus 25 cents.
Gas oil's March crack over Middle East Dubai crude extended the previous day's gain of more than 1.00 dollars by almost another dollar to 13.09 dollars a barrel, indicating the market's continued concerns over tight supplies of low-sulphur gas oil ahead of refinery turnarounds in Japan.
The shipments of gas oil from Singapore to Africa due to much more expensive Middle East cargoes, have also provided a bullish tone to the market, traders said.
March regrade - the spread between jet-kerosene and gas oil - increased by 50 cents to 4.75 dollars a barrel as Sri Lanka's Ceypetco is seeking 300,000 barrels of middle distillates for early-April delivery as its semi-term supply contract from India will end next month.
The Asian middle-distillates market was also boosted by gains on Thursday in the middle distillates market in Northwest Europe, where traders said supplies were tightening on reduced flows from Ventspils.
March fuel rose further to a fresh all-time high of $351 a tonne, against $348.00 a tonne on Thursday, with its March/April backwardation weakening to $11 a tonne.
The product's March crack spread to Dubai was assessed at minus $5.91 a barrel, down 50 cents.
Naphtha swaps rose by $1.60 a barrel at $60.25/$60.45 for March and by $1.50 a barrel to $60.15/$60.35 for April.
NYMEX crude for April traded up 27 cents a barrel to $63.63 by 0453 GMT, extending an overnight gain of more than $1 in New York on fears of supply disruptions that raised the geopolitical risk premium.