Asian middle distillates rose on Monday in tandem with crude futures, but the regrade weakened to nearly a 7-month low on gas oil's strength, slack heating fuel demand in Japan and growing jet fuel supplies.
The window recorded a sole physical trade. Hin Leong bought 150,000 barrels of 0.5 percent sulphur gas oil at a premium of 10 cents a barrel to spot quotes for mid-February loading, wider than a previous deal at a discount of 30 cents last week that signalled a run-up in prices.
Gas oil's February/March swaps spread held steady at 55 cents a barrel while the February crack strengthened to $15.79 a barrel from $14.95 last week. Supplies of diesel tightened as some refiners cut back on exports to meet petrochemical demand amid soaring naphtha prices.
For instance, Taiwan's Chinese Petroleum Corp (CPC) called off a tender to sell 30,000 tonnes of gas oil for February for that purpose. CPC, which had intended to sell the 0.25 percent sulphur grade for early-February lifting, would export 60,000 tonnes of diesel, down from the 90,000 tonnes exported this month. The January exports comprised two term cargoes and a spot parcel transacted via tender.