Europe Product Swaps-Gasoline swaps retreat; curve flattens

LONDON, Nov 9 (Reuters) - Gasoline swaps eased, all but
eliminating the backwardation structure on diminishing export
opportunities to the United States following
higher-than-expected unemployment figures.

Intermonth spreads at the front of the curve were just $2,
down from a backwardation of $6.50 last week.

Fuel oil swaps also moved to flat, but from a narrow
contango, after a heavy export flow to Asia in October.

GASOLINE/NAPHTHA

* The gasoline backwardation at the front of the curve fell
to $2 from $6.50 last week after news that U.S. unemployment
rose more than expected in October to over 10 percent.
[ID:nN04495174]

* Some analysts estimate every 1 percentage point hike in
U.S. unemployment destroys 70,000 barrels a day of gasoline
demand.

* Gasoline swaps for November fell to $688.50 a tonne fob
ARA from $700 last Monday. Levels for November were around $9
above the second most expensive refined product jet fuel, down
from a $30 premium last week.

* Swaps for 2010 were in contango through to June.

* The arbitrage swap for November fell to minus $1.50 a
tonne from minus 70 cents last week. But it remained positive
for December at $2.35.

* Cracks for the first quarter inched down to $5.15 a barrel
from $5.45 last week.

* Naphtha swaps jumped to a $2 backwardation from a $2
contango last week, with November at $670 a tonne cif NWE.

* Traders said that while gasoline blending demand was weak,
naphtha was more attractive to petrochemical firms than the
competing fuel liquefied petroleum gas.

MIDDLE DISTILLATES

* Gas oil crack spreads slid on the front of the curve ahead
of expectations for refinery restarts after autumn maintenance.
November cracks fell to $6.95 a barrel from $7.50/$7.75 last
week.

* Independent refiner Petroplus plans to start up two of its
refineries in France and the UK in early December after extended
maintenance. [ID:nL5419216]

* Gas oil barge differentials to ICE futures slipped to
minus $8.50 from minus $7.50.

* East/west spreads fell to nearly flat from a midpoint of
$1.50 last week, pointing to the closed arbitrage between Asia
and Europe.

* But the jet arbitrage remained open, traders said,
although swap differentials for this product jumped on the back
of fresh floating storage bookings.

* Jet November swaps traded at $48 a tonne cif NWE, up from
$43 last Monday.

FUEL OIL

* Swaps for the benchmark 3.5 percent sulphur grade moved to
flat for November/December from a slight contango. Both swaps
were priced at $453 a tonne fob ARA.

* This move to parity followed hefty bookings to take fuel
oil of this grade to the Singapore bunkering hub in October,
traders said.

* East/West spreads narrowed on the front of the curve by $4
to $21 in a move that traders said will slow the export flow to
Asia.
(Reporting by Emma Farge, editing by Sue Thomas)

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