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Asia Oil Swaps-Fuel oil cracks plunge to near 19-month low on supply glut

(For 12-month forward curve, click )

SINGAPORE, Nov 20 (Reuters) - Fuel oil's December crack spread plunged to a

near 19-month low on supply glut and bleak demand outlook for the heavy residue

fuel. Demand from both utilities and bunker marine have been lacklustre since

September, driving timespreads into a contango price structure that has extended

into the May/June contract.

A contango price structure is when forward prices are higher than prompt

prices, indicating weak demand.

"I think a lot of fuel has just arrived in Singapore and a lot more is still

being offered around," said a Singapore-based trader, adding that up to two

VLCCs carrying Venezuelan fuel oil reached Singapore berth during the week with

another expected towards the end of November.

Singapore typically receives around two VLCCs of fuel oil from Venezuela on

a monthly basis.

The outlook for fuel oil remains bleak because of an expected heavy inflow

of western fuel oil in December. Asia expects to receive around 300,000 tonnes

more arbitrage fuel oil in December compared with November at around 5 million


Despite the expected heavy arbitrage inflow, the East-West spread, the

differential between Asian and European prices, hovered near a two-week high at

around $34.50 a tonne.

In naphtha, the prompt December/January timespread dropped to its lowest

since end-September amid lack of buying appetite from end-users.

North East Asia-based cracker operators were mulling reduction in

utilisation rates to combat declining petrochemical margins.

In gasoil, timespreads were mostly strong amid subdued trade early Tuesday.

Regrade spreads, the differential between jet and gasoil prices, were mixed but

traders expect firmer January and February contracts on expectations of stronger

jet fuel demand.

Front-month January Brent futures rose $1.68 per barrel to $111.56

per barrel from Monday's Asia close.

For a full list of swaps trades:


Fuel oil's December/January timespread was 50 cents lower at a $3.88 a tonne

contango. The January/February contract similarly dropped 38 cents to stand in a

$3.25 a tonne contango.

The February/March timespread was flat in a $2.00 a tonne contango.

The December crack was valued 74 cents wider at an $11.57 discount to Dubai.

The January crack was also 63 cents wider at a $9.99 discount to Dubai crude.

The December, January 180-cst fixed-price swaps were at $630.50 and $634.38

a tonne, up $4.88 and $5.38 respectively.


Naphtha CFR Japan's December/January timespread was 75 cents lower at a

backwardation of $8.25. The January/February contract was 25 cents lower at a

backwardation of $9.50.

The CFR January crack was 77 cents wider at a discount of $7.53 and the

February discount was 58 cents wider at $7.79 per barrel to Brent crude.

The CFR December swap rose $16.00 to $944.50 per tonne, while the FOB

Singapore December swap was $1.40 firmer at $103.30 per barrel.


Gasoil's December/January timespread was 17 cents higher in a contango of

$1.85 a barrel. The January/February backwardation dropped 5 cents to 40 cents

per barrel.

The December crack rose $1.02 to a premium of $17.44, while the January

premium was 88 cents lower at $20.27 per barrel to Dubai crude.

December's regrade, the spread between jet fuel and gasoil, was at a premium

of $1.90. The January contract flipped into a discount of 5 cents per barrel.

December and January fixed-price contracts were at $126.01 and $127.86 per

barrel, up $2.34 and $2.51 respectively.

PRODUCTS Price Change Pct Change

DECEMBER naphtha 103.20/103.40 1.40 1.37

JANUARY naphtha 101.75/101.95 1.35 1.34

DECEMBER naphtha 944.25/944.75 16.00 1.72

JANUARY naphtha 936.00/936.50 16.75 1.82

DECEMBER gasoil 125.91/126.11 2.51 2.03

JANUARY gasoil 127.81/127.91 2.34 1.86

DECEMBER fuel oil 630.25/630.75 4.88 0.78

JANUARY fuel oil 634.25/634.50 5.38 0.85

Product Price Change

DECEMBER regrade 1.80/2.00 -0.15

DECEMBER gasoil crack 17.34/17.54 1.02

DECEMBER 180/380 cst 9.25/9.75 -0.13

DECEMBER fuel oil crack -11.67/-11.47 -0.74

DECEMBER jet fuel crack 19.24/19.44 0.87

JANUARY naphtha crack -7.63/-7.43 -0.77

Inter-month spread Mean Prev Change

DECEMBER/JANUARY naphtha 1.45 1.40 0.05

DECEMBER/JANUARY naphtha (CFR 8.25 9.00 -0.75


DECEMBER/JANUARY gasoil -1.85 -2.02 0.17

DECEMBER/JANUARY fuel oil -3.88 -3.38 -0.50

(Reporting by Bohan Loh; Editing by Subhranshu Sahu)