Singapore (Platts)--16May2008

As the week closed in Asia, Hin Leong had accumulated 3.3 million barrels
of jet fuel in a buying spree that began last week, Platts data showed Friday.
The Singapore trading outfit was much less active in gasoil this month,
seemingly putting all of its focus on the jet kerosene market.
At its current rate of buying, selling looked to be thinning out based on
offers shown during Thursday's Market On Close assessment process. There were
only three offers, from seven to eight offers seen earlier in the week.
Opinions varied as to how much more jet fuel the market can sell,
especially with the ongoing supply tightness in the Middle East. But the
general view seems to be that there will be barrels to sell at a price.
"The market can sell a lot more because jet just keeps coming in from
elsewhere," said a trade source. "Asia produces a lot of jet, so there will be
enough jet to sell to them at a price. The question is, where are they taking
all the jet?"
Officials at Hin Leong declined to comment on the reasons for a buying
spree that this week saw it pick up 2 million barrels of jet fuel from a
variety of sellers, adding onto the 1.3 million barrels it bought last week.
Market watchers and traders said this week that Hin Leong appeared intent
on buying more, while one trader doubted its capacity to continue.
"If the Arab Gulf jet comes here, then the market can supply a lot.
However it's not clear about Hin Leong's capacity to continue to buy," he
said. "Of course they have the storage to do it, since it doesn't look like
they are doing gasoil right now, but it's expensive to store oil right now
with the backwardation and the cost of financing," he added.
Most traders felt that it is unlikely that Hin Leong would use all the
barrels they bought for blending into gasoil, as there is a limit as to how
much one can blend, while others thought they might have regional commitments.
"They can easily place 2-3 million barrels in the region," said a third
source.
One thing is clear, however. Hin Leong's continued strong buying has
helped support the Singapore jet fuel premium. This was assessed at
$2.32/barrel Thursday, up from the 65 cents/b on May 2. This compared with the
$1/b premium Taiwan's Formosa fetched for an early-June loading cargo it sold
this week.
--Weilyn Loo, weilyn_loo@platts.com