Gasoline: Sluggish fundamentals push markets down

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis declined due to sluggish supply/demand fundamentals. Especially, increasing exports from China capped the markets. According to a market participant, independent refiners in the country expanded sales volumes in the domestic market, so that state-owned oil firms shifted sales from the domestic market to abroad.

It was another bearish factor that procurements did not emerge from Mexico because the arbitrage window from Asia to the US remained closed. A market source mentioned that demand for the fuel unexpectedly decreased in the US due to heavy rains.

In the spot market, China's Dalian West Pacific Petrochemical Co Ltd (WEPEC) sold one MR-size cargo of 92RON gasoline loading on Aug 5-7 at a discount of around 50cts/bbl to the quotations on an FOB basis.

Naphtha: Unit trouble in Saudi weighs on market

The first half September open-spec naphtha prices on a CFR Japan basis went down on sluggish supply/demand fundamentals. Supply in Asia was ample as refineries were running at high levels to refine middle distillates that had so healthy margins. A part of end-users was able to fulfill demand with domestic supply. In addition, a market participant speculated that demand of naphtha in China was replaced with ethane from the US as some end-users in China were able to import volumes from the US. The awardable prices for the first half of September were heard to be at a slight premium to the quotations to be assessed 45 days before on a CFR basis. There was almost no intermonth spread.

The differential for LR-size cargoes of naphtha on an FOB Middle East basis was unchanged on week. However, market prices for cargo from the Middle East were capped due to oversupply from Europe and the US to Asia. In the meantime, troubles occurred at a reformer at a refinery and petrochemical complex in Saudi Arabia, so that surplus naphtha was flowing into the spot market.

Middle distillates: WEPEC in China sells Aug cargoes

The differential for MR-size cargoes of jet fuel on an FOB South Korea basis declined on week The market was pushed down amid the backwardation structure in Singapore. West Pacific Petroleum Co Dalian (WEPEC) in China sold some cargoes loading in August. In Taiwan, an MR-size cargo for delivery on Aug 15-30 purchased by CPC through a tender was reportedly traded at a premium above $1.00/bbl on a CFR basis. The company was schedule to have turnaround of the 150,000b/d crude distillation unit and the 80,000b/d residue fluid catalytic cracker at its 350,000b/d Talin refinery from mid or late September for two to three months. CPC was likely to be moving to buying the cargo to build up inventories before the maintenance activities as malfunctions of the RFCC had been prolonged.

The differential for MR-size cargoes on an FOB South Korea basis weakened. Selling pressures strengthened due to sluggish buying interests. GS Caltex in South Korea sold two MR-size cargoes of 0.05% sulfur gasoil loading in August. A market source said that demand of the grade in Vietnam was slowing down, and selling pressures strengthened.

Fuel oil: SK sells mid-Aug cargo

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged on week. However, the market lacked upward momentum amid a sense of oversupply. SK Energy in South Korea sold an MR-size cargo of 0.5% sulfur fuel oil loading in mid-August. Most traders had already finished their purchases for cargoes loading in August. On the other hand, refiners were raising supply of low-sulfur fuel oil by raising operations of the residue desulfurization units at their refineries on the back of high crack margins of the fuel.