Singapore Gas Oil Hits 5-Year High

Gas oil, otherwise known as diesel, traded on the international Singapore market at $30.60 per 42-gallon barrel its highest level since the 1990/1991 Gulf War.

The gas oil, for loading late in November, was traded between an oil major and a local trader, market sources said.

But while gas oil in Asia has traded at a new five-year high, gas oil in Europe and the United States has been falling.

Benchmark prompt heating oil futures, a US form of gas oil, traded to a five-year high of 76.75 cents per gallon on October 8, but have since fallen to 67.50 cents because of rising stocks.

 

In London, prompt gas oil futures hit a five-year high of $250.00 per tonne ($33.51 per barrel) on October 8 and have also fallen since. Yesterday they were trading in London at $220.00 per tonne.

Petroleum product traders in Singapore said the strength of gas oil in Asia was the result of several factors.

One was strong demand from around the region.

One major buyer, Indonesia, has more than doubled the volume it normally imports to as much as six million barrels in November because of a refinery closure for maintenance.

Another factor was that Asia prices have not risen as fast as prices in the west, so fast declines in westerm prices had been expected.

However, the firm price of Asian gas oil might not hold for long.

Traders said as many as eight cargoes of 260,000 barrels each were heading to Asia from Europe and the United States because of the high Asian prices.

The Singapore gas oil derivatives market, which can provide a future indication of gas oil prices, is quoting December barrels at $29.60, one dollar less than the latest record trade.

World oil demand:Global demand will jump sharply this winter but extra supplies from new non-Opec developments, delayed from earlier this year, will help meet the rise in consumption, the International Energy Agency said yesterday. Global demand will rise to 73.8 million barrels per day in the fourth quarter 1996. A 100,000 bpd upward revision and up 1.9 million from the same period last year, the Paris-based agency said in its monthly oil market report.

Demand is expected to hit 74.7 million bpd in the first quarter of next year and average 73.7 million for 1997, a 1.9 million rise on the year, and a 100,000 bpd upward revision from last months report, the IEA said.

Rising winter demand will increase the call on Organisation of the Petroleum Exporting Countries (OPEC) crude supplies plus stocks to 26 million bpd in the fourth quarter and 26.5 million in the first quarter 1997, the agency said, making minor adjustments to last months report.

End-September industry oil stocks held in the West stood a sharp 91 million barrels below the same period 1995 with distillates making up more than half the shortfall, the IEA said.

Organisation for Economic Co-operation and Development (OECD) member countries oil inventories rose a slim 0.1 million bpd in September and averaged just 0.4 million in the third quarter.

But the stock shortfall was expected to decrease appreciably in the fourth quarter, the agency said.