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Asia products outlook: Mixed, tightness eases

SINGAPORE: Asian oil products can expect to see tightness in gas oil and gasoline ease slightly this week, while that in fuel oil lingers, traders said on Monday.

Gas oil supply was expected to climb from the Middle East as the east-west arbitrage window had effectively closed.

They said fob Singapore quotes at around $250 per tonne, down from last week's peak of close to $300 per tonne, may attract a return in buying interest from such regionals like Hong Kong.

Gasoline's gains last week, meanwhile, nearly shut the arbitrage window to the United States, a predominantly supportive factor to the Asian market for most of March.

But traders said the market was still far from oversupplied, as the tremendous volatility seen in crude prices last week had kept producers wary of risking a drastic increase in runs.

"The market has eased a bit, but looks unlikely to go into an supply overhang any time soon," one trader said.

But sentiment held firm for fuel oil as the market continued to be perceived as tight.

"Supply from the Middle East and Korea would continue to be tight for April, while demand has not waned much," said on trader.

Traders said fob Korea high sulphur fuel oil barrels were heard offered on Monday at $5.00-6.00 per tonne over Singapore prices for April lifting, up from last week's $4.00 level.

They said additional supply from regional producers such as Thailand held little downward pressures due to its limited volume.

But the market could trend weaker during the second half of April as more Middle East cargoes were expected to arrive in Asia.

Skyrocketting Asian fuel oil peaking at over $200 per tonne last week turned some Chinese end users to domestic supplies, but traders said Chinese demand was generally considered healthy.

Traders said the Asian jet/kerosene market would continue to be well supported by a wide open arbitrage window to the U.S. West Coast in an otherwise low demand period, traders said.-Reuters