SINGAPORE: Prompt fuel oil cracks hovered at more than 17-month lows in early Wednesday trade amid depressed demand and high supply. Reflecting the weak demand, the prompt inter-month contango sunk to a more than three-week low at $1.00 a tonne.
The contango price structure also spilled into the January/February inter-month timespread which stood at 25 cents per tonne. A contango price structure is when forward prices are higher than prompt values and is typically reflective of poor demand.
There was also weakness seen in fuel oil's first quarter 2013/second quarter 2013 timespread.
The contract was heard traded in a $1.50 and $1.25 backwardation before traders valued the timespread around a $1.00 a tonne.
In naphtha, prompt timespreads eased from a near one-month high in trade but players said that robust physical demand and tight supply is supporting valuations.
There were expectations for Taiwan's Formosa Petrochemical Corp to come forward to seek more second-half December shipments later in the week.
Formosa has bought 150,000 tonnes of first-half December shipments at premiums of $14.00-16.00 on a cost-and-freight basis to Japan quotes as it ramped up operating rates at its Mailiao crackers.
The November/December timespread contract was traded in a $10.50 a tonne backwardation in early Wednesday trade.
In gasoil, timespreads were mostly steady throughout the 12-month forward curve amid subdued trade.
The regrade spreads, the differential between jet and gasoil prices, were also lower as physical demand has begun tapering off.
Front-month December Brent futures drop 57 cents per barrel to $108.99 per barrel from Tuesday's Asia close.
For a full list of swaps trades:
FUEL OIL
Fuel oil's November/December timespread was steady at a contango of $1.00 a tonne.
The December/January contract dropped 25 cents to stand in a $1.00 a tonne contango.
The January/February timespread was flat in a 25 cents a tonne contango.
The November crack narrowed 7 cents to a discount of $10.15 per barrel to Dubai. The December crack was valued 14 cents narrower at a $8.89 discount to Dubai.
The November, December 180-cst fixed-price swaps were at $625.25 and $626.25 a tonne, down $2.13.
NAPHTHA
Naphtha CFR Japan's November/December timespread was 50 cents lower at a backwardation of $10.50.
The December/January contract was also 50 cents a tonne lower at a backwardation of $9.50.
The CFR December crack was 10 cents wider at a discount of $6.77 and the January discount was 12 cents wider at $6.64 per barrel to Brent crude.
The CFR November swap dropped $6.50 to $930.50 per tonne, while the FOB Singapore November swap fell 55 cents to $102.75 per barrel.
GASOIL
Gasoil's November/December timespread was 2 cents lower in a backwardation of 60 cents per barrel. The December/January contango was flat at $1.10 per barrel.
The November crack rose 17 cents to a premium of $18.44, while the December premium was 26 cents higher at $18.94 per barrel to Dubai crude.
November and December fixed-price contracts were at $124.78 and $124.18 per barrel respectively.
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