January regrade, or the spread between jet-kerosene and gas oil, lost $1.10 a barrel to $5.30 a barrel. "It is a pricing game. Some player wants the regrade to weaken," said a trader.
A lower regrade value signals a weaker jet-kerosene market but fundamentals show otherwise.
"Japan is hungry for jet-kerosene imports but supplies are so scarce," said a trader.
Dogged by freezing temperatures, major supplier South Korea is keeping cargoes for domestic consumption.
China's WEPEC, a regular kerosene supplier, has little to offer in the market after it sold 20,000 tonnes of dual purpose kerosene to a Japanese trading firm at $5.00 a barrel over benchmark quotes on a free-on-board basis, traders said. The cargoes are for loading in February.
Japan's kerosene stocks fell 6.5 percent from October to 4.85 million kilolitres in November, government data showed.
Gas oil's January/February swaps backwardation was steady at 30 cents a barrel, so was its January crack over Middle East Dubai crude at $12.60 a barrel.
The market was supported by Hin Leong's buying spree despite sluggish demand shown by Indonesia. The Singapore trader bought 360,000 barrels of gas oil in the cash session on Wednesday, stretching its purchases to 1.5 million barrels over the past week.
State oil firm Pertamina cut January imports of middle distillates by nearly 19 percent from December to 7.36 million barrels, and gas oil purchases alone fell 19.4 percent to 5.8 million barrels.
Fuel demand in Indonesia has softened following a price rise in October, and the country is relying on domestically produced supply to ward off costly imports.
The market was also not affected by Formosa's small delay in cargo liftings after a hiccup at a vacuum distillation unit caused the refiner to cut processing rates.
The Taiwanese refiner will only defer the loading of three gas oil parcels by five days in mid-January.