Asian oil product swaps fell on Wednesday, with the fuel oil market firming despite news of a flotilla of distressed cargoes while the gas oil market was supported by physical buying.
August fuel oil was lower at $347.25 a tonne, down $7.13 from the Tuesday session, with its August/September contango narrowing 25 cents to $4.63 even with 300,000 tonnes of fuel oil stranded offshore Singapore for over a week amid heavy regional imports and sagging demand, piling pressure on ailing prompt values.
Traders struggled to find buyers for the cargoes, even at deep discounts, because the Asian market is inundated with fuel oil and storage tanks are filled to the brim.
The August crack to Middle East Dubai crude gained 65 cents to minus $14.65 a barrel. August gas oil fell to $84.80 a barrel, down 90 cents from Tuesday, with the August/September contango off 15 cents, triggered by overall losses in crude.
The product's crack spread over Dubai for August was at $16.63 a barrel, up a 59 cents, as there was no letup in Hin Leong's cash buying.
August regrade - jet fuel's premium to gas oil- lost 20 cents to $3.10 a barrel, despite support from 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.