Gasoline: Market shoots up on purchases

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia went up. A sense of thin supply continued as supply concerns from China had yet to be eased. The Chinese government had yet to announce the fourth export quotas of oil products and exports from the country were still uncertain for December. Meanwhile, some refiners were moving to sell cargoes loading in the month. Sinochem proved to have sold an MR-size cargo of 92RON gasoline loading in the first half of December from its 300,000b/d Quanzhou refinery to an Oil Major. The price was reportedly at a premium of $3.00/bbl to the quotations on an FOB basis. As the contango market structure in the Singapore paper swaps market was narrowing, it was informed that deals for cargoes loading in the second half of December could take place at around the same level as Sinochem's one. In Southeast Asia, several buyers in Southeast Asia were talking on term cargoes for the next year.

Naphtha: Few demands cap the market prices

Open-spec naphtha prices on a CFR Japan basis were at a premium of $2.50-3.50/mt to Japan quotations to be assessed 30 days before delivery and at a premium of $1.50-2.50/mt to the quotations to be assessed 45 days before delivery. Demand for naphtha didn't increase and the market prices were capped. It was one of the backgrounds that demand for petrochemical products didn't recover due to dull economic activities. It was pointed out that the reduction of the petrochemicals production volumes was expected to continue in Northeast Asia next year.

In South Korea, some petrochemical companies were negotiating annual term contracts next year. LG Chem reportedly struck an annual term contract starting from April in 2024 to March in 2025 at a premium of $1.50-2.00 to Japan quotations on a CFR basis. In Japan, some petrochemical companies reportedly negotiated or dealt with suppliers for annual term contracts from January in 2024 at a slight discount to flat.

Middle distillates: Refining margins for jet fuel wider than those for gasoil

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis showed solidity. Talks on cargoes for the second half December started. In the Singapore futures market, a backwardation was formed and the traded prices slightly declined. However, tight supply/demand fundamentals didn't ease in the spot markets and the decline was limited.

On demand side, the arbitrage from Asia to the U.S. West Coast opened and there were certain inquiries for cargoes bounded to the region, it was heard. On the supply side, South Korean refiners had focused on refining kerosene and winter-spec gasoil. The exports plan in China in December had yet to be revealed. Those factors supported the market prices.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis declined. Prolonged strong selling interest capped the market. From October to early November, the price spread between jet fuel and gasoil stayed at minus $1.50/bbl or deeper in the Singapore paper swaps market. Therefore, refiners had raised the production yield of gasoil as its margins were better than jet fuel.

In Europe, demand of gasoil was reportedly weakening, and cargoes from the Middel East and India were said to be headed to Asia such as Singapore.

Fuel oil: Japanese refiner retains room for providing HSFO

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB Japan basis was unchanged on week. The underlying tone, however, was soft amid lackluster demand. One Japanese refiner seemed to have room to distribute 180cst fuel oil for loading in January, according to a market participant. The oil company was believed to suffer from kinks of a secondary unit at its refinery, generating a surplus of fuel oil. This company dispensed high sulfur fuel oil (HSFO) loading even in December, as previously reported.