Asian oil swaps continued to rise in Tuesday afternoon, following rising US crude. July fuel oil was quoted at $275.50 a tonne, up from $273 a tonne in the early trade. The rise in fuel oil swaps was more significant than the crude spike, strengthening the July crack spread slightly to minus $11.30 a barrel from minus $11.60 a barrel.
The price spread between July and August swaps remained steady at a backwardation of 25 cents a tonne. The market has been in a slight backwardation so far this year after flipping into a contango briefly last week.
"There are two sides pushing the prices in the opposite directions," a trader said.
"Some players are pricing in this week, but the supply is getting tighter because the arbitrage volume of 2.5 million tonnes is spread out over 1.5 months rather just one month in July," he said.
Like fuel oil, gas oil also continued to climb higher, with July swap rising to $72.25 a barrel from $71.80 a barrel in the early session.
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