Gasoline: SR-size of 91RON markets down on fewer buying interest

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia was unchanged on week. Talks in the spot market were inactive in part because full-fledged sales by Chinese companies had yet to start. As mentioned, refiners in the country were running short of their existing export quotas and sales for September cargoes by them were slow amid narrowing refining margins.

The differential for SR-size cargoes of 91RON gasoline on an FOB South Korea basis went down. Buying interest from Japan, one of the main outlets for SR-size cargoes from South Korea, was declining. While turnaround of refineries was getting over and troubles at some refineries were eased in Japan, supply was expected to increase in September onward. On the other hand, domestic demand was softening as the summer demand season was peaking out. Some refiners seemed to have ample volumes at hand as they had secured enough volumes in the domestic market. Meanwhile, Japanese trading houses were curtailing their purchases of cargoes form South Korea.

Naphtha: Fewer arb cargoes push naphtha prices up

The first half October open-spec naphtha prices on a CFR Japan basis increased. The market prices stayed firm. The arbitrage window remained closed and that declining arbitrage cargoes were perceived to affect fundamentals in Asia. In the meantime, a market participant mentioned that refining margins of oil products lacked strength and the operation rates of crude distillation units might go down going forward.

A market source paid an attention to the gasoline market in the US. In the country, the gasoline high demand season in summer was winding down. If gasoline demand in the country would decrease, the naphtha market prices in Europe was expected to weaken as well.

Middle distillates: Arb for other region shrinks for jet fuel

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis soften. The arbitrage window from Asia to the other regions was closed due to rising LR-size vessels freight rates, and bearish market tone in Europe and limited buying interest in the U.S. were likely to be causing slack supply/ demand fundamentals in Asia. Sales for September loading cargoes from China were expected to increase and it was considered to be one bearish factor.

A US-based Boeing made its decision to invent into an Australia-based renewable energy firm Wagner Sustainable Fuels. Wagner will construct the SAF production unit in Queensland, Australia and is planning to supply SAF to the local airport.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis fell down. Stronger selling interest from South Korea and rising freight rates pushed the market prices down. A market participant mentioned that South Korean refiners were probably speculating that domestic demand would decrease, so that was moving on exporting cargoes as the government in the country decided to continue the tax cut policy on oil products in September onward.

Fuel oil: Market sees less non-Asia VLSFO cargoes

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was standing at the level equivalent. At this time, some players began to predict that supply/demand balances would tighten sometime soon in Asia. Nigeria's 650,000 barrel-per-day Dangote refinery purportedly cut back on export volumes of very low sulfur fuel oil (VLSFO), limiting to one or two cargoes for arriving in Asia in early-September, said a trade source familiar with the matter. In the country, refineries were believed to have problems with crude oil procurements. The resultant decline in refinery utilization rates appeared to erode export volumes of petroleum products including fuel oil.

No impact on Asia, however, was seen so far in the midst of stagnant demand of low sulfur fuel oil (LSFO).