Products: Nov 18-22: FOB Northeast Asia prices for gasoline slids on sluggish demand
The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis slid on sluggish demand. Demand in Indonesia, the largest buyer of the fuel in Asia, remained weak. In addition, a Dec/Jan inter-month spread had widened to $1.50/bbl in backwardation in the Singapore paper swaps market. This movement also pushed down the differentials for loading in late December. On Wednesday, a refiner in China sold an MR-size cargo of 92RON gasoline loading on Dec 28-29 from South China at a slight discount to Singapore quotations on an FOB basis. On the same day, another refiner in the country closed a sell tender for 250,000-300,000bbl of 92RON gasoline loading at the end of December from South China, but the deal had yet to be reported.
These days crack margins of oil products were worsening, so that refinery run rates in Europe and Singapore have been pulled down due to economy. In the meantime, many refineries were assumed to resume from turnaround, and majorities perceived that supply was in upward trends. A point-out was heard that it was bearish factor for naphtha prices.
The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis rose on expectations that supply would get tight. The number of cargoes from China loading in December could be lower than it had been earlier expected. In addition, as the market had been undervalued, deal levels seemed to be pushed up. A market source said that a refiner in Japan sold an MR-size cargo of 0.001% sulfur gasoil loading in mid-December at a discount of 30cts/bbl to Singapore quotations on an FOB basis. Meanwhile, a refiner in South Korea sold an MR-size cargo of 0.001% sulfur gasoil loading in early December at a discount of 70-80cts/bbl to the same quotations. However, a market source pointed out that the cargo may have been traded at a low differential due to its prompt laycan.
The differential for MR-size cargoes of 3.5% sulfur fuel oil on an FOB South Korea basis fell from the previous day as discount for 380sct in the Singapore fuel oil market was widening. In South Korea, although some domestic demand for bunker existed, exports for high sulfur fuel oil cargoes were lackluster. An oil company in South Korea mentioned that the deal levels for 3.5% sulfur fuel oil (380cst) loading from South Korea were dipping to a discount of around $15.00/mt to Singapore quotations (380cst).