Gasoline: Market up as fundamentals expected to tighten

The differential for MR-size cargos of Non-oxy gasoline strengthened with an expectation that supply/demand fundamentals would become tight. GS Calex in South Korea sold one MR-size cargo of 91RON non-oxy gasoline loading on May 16-20 via a tender. This cargo was expected to be transported to New Zealand. The volume of production and supplies was expected to be limited as the regular maintenance season was continuing in Northeast Asia. In addition, expectations that demand for other regions would likely increase were perceived to be a bullish factor. Mexico state-owned Pemex had bought four or five cargoes loading in April in Asia including China and Singapore.

Naphtha: Markets for heavy grade balance

Talks of cargoes for the first half June open-spec naphtha started with small prices movements. No fresh factors emerged. A part of market participants was staying in a wait-and-see stance to see supply/demand fundamentals of derivatives and trade frictions between the US and China. One refiner forecast that the market for the material would probably be supported by more demand as a gasoline raw material.

The first half June heavy grade naphtha prices balanced. Demand as a gasoline raw material was expected to increase while market sentiments of aromatics such as paraxylene remained soft.

Middle distillates: Gasoil prices up on limited sales

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis went up on buying interest in the first half of May cargoes surfaced. In South Korea, SK Energy sold an MR-size cargo loading on May 6-8 and GS Caltex sold an MR-size cargo loading in early May. The cargoes appeared to be headed to Australia and some other destinations. The arbitrage window from Asia to the U.S. West Coast was also open, and strong inquiries from the U.S. market also contributed to a rise in the market.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis increased. The market tone was strong due to limited sales by oil companies in Northeast Asia. Cargoes from the Middle East and India to Singapore and other Asian regions also appeared to be declining, which led to a sense of tightening supply. In addition, sales of Japanese cargoes were limited due to some repair works of refineries and the discount was narrowing.

Fuel oil: Poor buying interest put downward pressures on high sulfur fuel market

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB South Korea basis weakened. Demand of bunker fuel was sluggish, and buying interest for fuel oil cargoes stayed weak. As reported earlier, an MR-size cargo of 3.5% sulfur fuel oil loading in early May from Chiba, Japan was being sold in the market. While no buyers were seen in Northeast Asia, bids for cargoes for delivery in Singapore were getting lower. In Singapore, market sentiment was weak as cargoes from regions outside Asia were flowing one after another. Meanwhile, the 650,000b/d Dangote refinery in Nigeria sold 80,000-88,000mt of residue oil. It was viewed that the operations of the residue fluid catalytic cracker (RFCC) at the refinery were not smooth. In addition, the refinery was scheduled to have regular maintenance activities in June for one month.