A draw-down in gasoil stocks due to regional demand helped push the outright Asian gasoil price to its highest in 26 months Monday.
The benchmark Mean of Platts Singapore 0.5% sulfur gasoil shot up $2.53/barrel on the day, or $6.29/b on the week, to be assessed at $103.21/b.
Prices were last higher on October 3, 2008 at $104.58/b.
The gasoil/Dubai crack also soared to an almost 23-month high Monday to be assessed at $15.04/b. It was previously assessed higher on January 14, 2009 at $16.00/b.
Apart from tracking a rise in crude prices, regional demand seen from countries like China, Vietnam and more recently Indonesia, are drawing down gasoil inventories, helping to keep gasoil prices strong, trading sources said.
Less gasoil exports from China and a recent buying spree from trading house Mercuria are supporting gasoil prices at the moment, the sources said. With temperatures dipping to below zero degrees Celsuis in many parts of Europe, demand for heating oil has also increased.
"Most grades are tight. A lot of people are sitting with shorts waiting for a dip in prices to buy, but the dip is not coming, as Europe [prices] hit the roof. Cold weather in the West always impacts global middle distillate markets," said a Singapore-based trader referring to the cold snap in Europe at the moment.
"We are seeing less [gasoil] exports from China, and this has impacted the market," he added.
Chinese cities have been suffering an unprecedented shortage of diesel as some local enterprises turn to the fuel to generate electricity in order to keep operating during periods of power rationing. Unipec, the trading arm of Chinese refining giant Sinopec, has bought 280,000 mt of gasoil to move into China for November and December, sourcing its supply from Singapore and Taiwan.
According to the latest data from the International Enterprises Singapore, Singapore's commercial stockpiles of middle distillates, which include gasoil and kerosene, fell by 12.03% in the week ended December 1 to 14.18 million barrels.
There is also a perception in the market that trading house Mercuria will be moving a lot of the physical gasoil barrels that it had bought for December loading from Singapore out of this region, the sources said.
Mercuria has bought 4.45 million barrels of 0.5% sulfur gasoil for late November and December loading in Singapore, which has kept the market talking about what the Swiss company plans to do with the physical barrels.
Mercuria was said to have moved 60,000 mt of gasoil into Indonesia for loading December 7 on the FR8 Venture vessel, and 100,000 mt of gasoil loading from Shanghai in early December to the west. But this could not be confirmed with Mercuria.
Meanwhile, trading sources said that the strong gasoil prices might not be sustainable given that domestic prices in many countries, including Philippines, China and Indonesia are lower than international prices.
"Domestic prices in these countries are still lagging behind as they are adjusted every three months ... unless the government wants to step in. It's difficult to sell to these countries as we will be losing money," said a Singapore-based trader.
The benchmark Mean of Platts Singapore 0.5% sulfur gasoil shot up $2.53/barrel on the day, or $6.29/b on the week, to be assessed at $103.21/b.
Prices were last higher on October 3, 2008 at $104.58/b.
The gasoil/Dubai crack also soared to an almost 23-month high Monday to be assessed at $15.04/b. It was previously assessed higher on January 14, 2009 at $16.00/b.
Apart from tracking a rise in crude prices, regional demand seen from countries like China, Vietnam and more recently Indonesia, are drawing down gasoil inventories, helping to keep gasoil prices strong, trading sources said.
Less gasoil exports from China and a recent buying spree from trading house Mercuria are supporting gasoil prices at the moment, the sources said. With temperatures dipping to below zero degrees Celsuis in many parts of Europe, demand for heating oil has also increased.
"Most grades are tight. A lot of people are sitting with shorts waiting for a dip in prices to buy, but the dip is not coming, as Europe [prices] hit the roof. Cold weather in the West always impacts global middle distillate markets," said a Singapore-based trader referring to the cold snap in Europe at the moment.
"We are seeing less [gasoil] exports from China, and this has impacted the market," he added.
Chinese cities have been suffering an unprecedented shortage of diesel as some local enterprises turn to the fuel to generate electricity in order to keep operating during periods of power rationing. Unipec, the trading arm of Chinese refining giant Sinopec, has bought 280,000 mt of gasoil to move into China for November and December, sourcing its supply from Singapore and Taiwan.
According to the latest data from the International Enterprises Singapore, Singapore's commercial stockpiles of middle distillates, which include gasoil and kerosene, fell by 12.03% in the week ended December 1 to 14.18 million barrels.
There is also a perception in the market that trading house Mercuria will be moving a lot of the physical gasoil barrels that it had bought for December loading from Singapore out of this region, the sources said.
Mercuria has bought 4.45 million barrels of 0.5% sulfur gasoil for late November and December loading in Singapore, which has kept the market talking about what the Swiss company plans to do with the physical barrels.
Mercuria was said to have moved 60,000 mt of gasoil into Indonesia for loading December 7 on the FR8 Venture vessel, and 100,000 mt of gasoil loading from Shanghai in early December to the west. But this could not be confirmed with Mercuria.
Meanwhile, trading sources said that the strong gasoil prices might not be sustainable given that domestic prices in many countries, including Philippines, China and Indonesia are lower than international prices.
"Domestic prices in these countries are still lagging behind as they are adjusted every three months ... unless the government wants to step in. It's difficult to sell to these countries as we will be losing money," said a Singapore-based trader.
