Asian middle-distillate prices fell on Wednesday, triggered by weaker crude, but gas oil's crack spreads widened as there was no let-up in Hin Leong's cash buying.
The window recorded two physical trades. Hin Leong bought two cargoes at a discount of 30 cents a barrel, up from previous trades at minus 48 and minus 50 cents. "Hin Leong is still supporting the market. No one knows what's the firm going to do with the oil," said a Western trader.
The Singapore player last bought four cargoes of gas oil on Tuesday. Gas oil's August crack over Middle East Dubai crude expanded to $16.63 a barrel from $16.04 a day ago and the September crack gained 56 cents to $16.45 a barrel.
Its August/September paper contango narrowed 15 cents to 30 cents a barrel. But fundamentally, gas oil did not draw much support from regional top importers Indonesia and Vietnam.
Pertamina is expected to curb August diesel imports to 6-7 million barrels, down from nearly 8 million barrels for each of June and July as its domestic refineries were ramping up production to fend off expensive imports. Diesel usage in Vietnam also faltered because of the monsoon season, which generates a higher use of hydropower.
August regrade, or the spread between jet-kerosene and gas oil, narrowed 20 cents to $3.10 a barrel. The jet fuel market stayed supported by rising Chinese demand and lower supplies from South Korea. Fresh Indian demand also underpinned sentiment. Hindustan Petroleum Corp Ltd (HPCL) bought by tender 75,000 tonnes of kerosene for August-October supplies, trebling from its last purchase of 25,000 tonnes for May delivery. The cargoes were awarded to Vitol at a premium of $4-$5 a barrel to Middle East quotes.