OREANDA-NEWS. June 23, 2011. Their losses on Wednesday, falling to near USD 18 a barrel to its lowest level in over three weeks as high supplies in the region weighed on sentiment. The market has been banking on the prospect of China importing more diesel to meet rising demand for power generation in the country, but higher refinery runs and a curb on exports has reduced that possibility. "China has already cut back on exports and there is no real incentive to import," said Alex Yap, an analyst with FACTS Global Energy.

High inventories in Singapore and rising shipments from Japan are also putting pressure on prices, traders said. In South Korea, a diesel-producing unit operated by the country's second-largest oil refiner, GS Caltex, is still partially shut following technical glitches earlier this month, a company spokesman said on Wednesday, without elaborating. The refiner has asked state-run Korea National Oil Corp (KNOC) to release 870,000 barrels of diesel from a strategic reserve, said officials of both companies earlier on Wednesday. [ID:nL3E7HM1PR] Trading activity in gas oil swaps was thin for a third session, with only 150,000 barrels of the July contract transacted at USD 123.30 and USD 123.40.

There was heavier trading in the July/August timespread, which saw at least 200,000 barrels done at a contango of 28 cents, up from a value of minus 33 cents a day earlier. The jet fuel market was also weaker, as its front-month premium to gas oil fell to a one-week low below USD 1 a barrel on poor demand in the region. Reflecting the softer market, Pakistan State Oil (PSO) bought at least 50,000 tonnes of jet fuel for August-October delivery at lower premiums than for earlier deals, traders said on Wednesday. [ID:nLDE75L0ZW] * SWAPS OUTRIGHTS: Gas oil's July swap fell USD 2.13 to USD 123.40 a barrel, while the August swap lost USD 2.18 to USD 123.68 a barrel.- Jet swaps for July were valued at USD 124.35 a barrel, down USD 2.41, with the July regrade (the difference between jet and diesel prices) falling 28 cents to USD 95. * CRACKS: Gas oil's crack for July fell 86 cents to USD 18.04 a barrel over Dubai crude. - July's jet fuel crack shed USD 1.14 to USD 18.99. *
CASH DIFFERENTIALS: The discount for gas oil with 0.5 percent sulphur narrowed 5 cents to 70 cents, while the premium for the 0.25 percent sulphur grade fell 4 cents to 4 cents a barrel. - The premium for the 0.05 percent sulphur grade rose 39 cents to USD 1.40. - Jet fuel's cash discount stayed unchanged at 60 cents. * PHYSICAL OUTRIGHTS: Benchmark diesel with a maximum sulphur content of 0.5 percent fell USD 2.08 to USD 122.68 a barrel, while jet fuel prices lost USD 2.40 to USD 123.74. * CASH DEALS: Two gas oil deals, one jet fuel deal. - Shell bought 100,000 barrels of jet fuel for July 7-11 lifting from Glencore at a discount of 60 cents to Singapore spot quotes. - IPG sold 150,000 barrels of 0.05 percent sulphur grade gas oil to Shell at USD 1.40 a barrel above Singapore spot quotes for July 7-11 loading. - BP bought 150,000 barrels of 0.5 percent sulphur gas oil from Shell for July 7-11 lifting at 70 cents a barrel below Singapore spot quotes.