The Asian gasoil contango widened on Monday, giving traders the opportunity to eye storage opportunities, including floating storage, industry sources said. The February/March gasoil price difference widened to nearly 90 cents a barrel on Monday, which could break even cost for traders to store the fuel on landed tanks.
Storing these oil products on land costs about 80 to 90 cents a barrel, while rates for storing clean oil on newbuilt long-range vessels for three months are running about $27,000 a day, which works out to about $1.13 a barrel. Taiwan's Formosa Petrochemical Corp offered 480,000 barrels of 500 ppm sulphur gasoil, though it is expected to skip spot exports of 10 ppm sulphur diesel and jet fuel during a refinery maintenance which starts in March, traders said.
Vietnam's Saigon Petro bought 10,000 tonnes of 500 ppm sulphur gasoil for February 18 to 22 delivery into Ho Chi Minh City at a premium of between $1.20 and $1.40 a barrel to Singapore quotes, traders said. The seller could not be confirmed. Spot demand appeared from Jordan Petroleum Refinery which sought 3.75 million barrels of high sulphur gasoil.
The refinery last year switched its requirements to 500 ppm sulphur gasoil, but appears to have reverted back to 0.5 percent sulphur gasoil in its latest tender, traders said. The reason was not immediately clear, but could be due to cheaper prices for the high sulphur fuel, a Singapore-based trader said. The refinery last bought similar volumes for delivery over November to February from Shell.
Demand also appeared out of Africa, with PetroSA seeking 42,000 tonnes of gasoil for delivery in early March, traders said. The company recently closed a tender to buy 3 to 6 cargoes of 500 ppm sulphur gasoil for March to May delivery, though it is unclear if the tender has been awarded. South Africa is facing a power shortage, which is boosting demand for diesel, traders said.