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The Singapore front-month December/January gasoline swap spread has widened to 20 cents/b in the over-the-counter market in a knee-jerk reaction to the 7.3-magnitude earthquake which hit offshore Fukushima earlier in the morning, market sources said Tuesday.
It is not immediately clear if the earthquake, which caused the 600-MW No. 9 coal-fired unit at the Nakoso power plant to automatically shut down, will make any fundamental impact on the Asian gasoline market in the near term.
However, it is not unusual for market participants to hurry to cover short positions given the uncertainties surrounding such a natural disaster.
«It [the earthquake] could be a non-event sort of thing [for the Asian] gasoline market,» a trade source with a European trading house said.
«[But] normally if there’s an event like this, the shorts will cover first,» he added.
Market participants had valued the spread at 15 cents/b early Tuesday but this was revised higher to 20 cents/b after the spread was heard to have traded at 19 cents/b.
At 0400 GMT, the prompt spread was bid at 18 cents/b and offered at 29 cents/b on the Intercontinental Exchange with no trades registered for the spread. S&P Global Platts had assessed the December/January swap spread at 10 cents/b at the Asian close Monday.
Apart from the coal-fired power plant unit, the earthquake has not affected refining operations in the area.
However, Japan’s largest refiner JX Nippon Oil & Energy has suspended truck and waterborne oil product shipments from its 145,000 b/d Sendai refinery in the northeast and the 252,500 b/d Kashima refinery on the east coast.
Refining operations and oil product shipments at the Chiba facilities of Idemitsu Kosan and Cosmo Oil were unaffected by the earthquake, while oil product shipments from Idemitsu Kosan’s Hachinohe and Shiogama terminals were suspended. Cosmo Oil suspended trucking of oil products from Hachinohe, Shiogama and Onahama terminals.
According to the Japan Meteorological Agency, the 7.3-magnitude earthquake hit at a depth of 10 km offshore Fukushima in northeastern Japan at 5:59 am local time Tuesday (2059 GMT Monday).
Tsunami warnings were issued for Fukushima and Miyagi prefectures in the northeast, and advisories for the Pacific Coast in Aomori, Iwate, Ibaraki and Chiba prefectures, the JMA added.
–Norazlina Juma’at, nora.jumaat@spglobal.com
–Edited by Irene Tang, irene.tang@spglobal.com
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