Gasoline: Fundamentals for Oxy loose, demand for Indonesia and Mexico weak

The differential for MR-size cargos of 92RON gasoline on an FOB South Korea basis and on an FOB China basis were both unchanged on week. However, supply/demand fundamentals for oxy gasoline remained sluggish and the market lacked strength. It was reported that demand was weak from Indonesia, a main buying country of oxy gasoline. In addition, it was pointed out that the arbitrage window from Asia to the US remained narrow and inquiries from the region did not increase. According to a market participant, Mexico state-owned Pemex had bought only one cargo for August-loading in Asia.

Meanwhile, in talks on non-oxy gasoline, Japan's Cosmo Oil had procured total three MR-size cargoes for August-loading. It planned turnaround at the 100,000bbl-per-day Sakai refinery from late August. According to a market source, however, it had already reduced the operation rates of its Sakai refinery because some glitches had hit the refinery.

Naphtha: Sentiments for 1h Sep-delivery soft on retreating China demand

Market sentiments for the first half September open-spec naphtha prices were soft. According to a market source, cargoes were expected to be supplied from the US to Asia and Europe and it caused ample supply.

On the demand side, buying interest was reportedly retreating from China. A part of end-users that owned ethylene units that could use ethane was expected to use ethane and promote sales for ethylene in the Chinese domestic market. Thus, it would push demand for naphtha up. In the meantime, domestic supply for naphtha was increasing in China due to high operation rates of refineries. Several oil firms maintained the operation rates of their refineries at high levels in other countries. A market source pointed out that healthy margins of other products such as gasoil supported the high operation rates of refineries.

Market sentiments for the second half September were expected to become stronger. Sales volumes of the arbitrage cargoes were likely to decrease going forward as the price gaps between Asia and Europe tended to shrink. One end-user considered that trading houses might close a long position going forward.

Middle distillates: Jet market on the decline amid summer demand winding down

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis declined. The arbitrage window from Asia to Europe and the US was shrinking. Although inventory levels in Europe and the US remained low, the end of the summer vacation season was looming, and the market was cooling down. Jet fuel exports by Chinese companies remained high. Some Chinese oil companies still had August cargoes for sale.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis slightly moved up. Supply was thin as export volumes in China in August was limited. China National Offshore Oil Co (CNOOC) sold an MR-size cargo loading on Aug 28-29 at a discount of 30-40cts/bbl to the quotations on an FOB basis. It was probable that this cargo would be delivered into its neighborhood such as Hong Kong or the Philippines.

Some market sources saw that supply/demand of gasoil in Europe would stay tight for the time being. As demand in the US remained firm, the number of cargoes from the US to Europe seemed few. In Europe, still cargoes from India were flowing. However, imports of gasoil originated from Russian crude oil to Europe were impossible due to the economic sanctions on Russia. Oil products from India were likely to include some volumes which were refined from Russian crude, so that supply/demand fundamentals of gasoil in Europe were expected to get tighter if European nations would not receive gasoil from India.

Fuel oil: Poor domestic sales urge Indian companies for exports

The differential for MR-size cargoes of 3.5% sulfur fuel oil on an FOB Japan basis was unchanged. However, the market lacked upward momentum on the back of ample supply in Asia.

In Singapore, inventories stood high due to inflows of cargoes from regions outside Asia, and it was forecast that it would take time until the inventories would be digested. Thus, supply/demand fundamentals were slackening.

As reported, demand in India was declining as the monsoon season had started, and oil companies were exporting excessive volumes.

In the meantime, demand in the bunker market was sluggish. Market players were concerned if the world economy would slow down due to an increase of tariff by the US government, and transportations of vessels could decline. It was likely that oil companies in China were inactive to procure fuel oil.