Gasoline: Backward market, unit recovery and high freight push down prices

The differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis and the differential for 92RON gasoline on an FOB Japan basis slightly went down because of some factors such as backwardation in the Singapore futures market, unit recovery at refineries from troubles and high-level freight rates. In the spot market, one MR-size cargo of 92RON gasoline loading in Chiba, Japan on Jan 29-31 was awarded at a premium in the range of $1.10-1.20/bbl to the quotations on an FOB basis.

As for facilities, Indonesia state-owned Pertamina would postpone full-fledged operations of the 90,000 bbl-per-day (b/d) residue fluid catalytic cracker (RFCC) at its 360,000 b/d Balikpapan refinery. According to market sources, the refinery was conducting its trial runs at low rates, but full-scale operations were expected to start in March or later.

Naphtha: No sense of tight fundamentals seen in talks on OSN by rolled over cargoes

The differential for open-spec naphtha for the first-half February delivery cargoes into Japan was unchanged. A part of cargoes for delivery in late January was reportedly rolled over in the spot market, so that buyers did not rush procurements. In addition, it was also a bearish factor that turnaround of refineries was gradually ending in Northeast Asia and the Middle East. On the other hand, demand for naphtha was expected to increase because of rising the LPG market.

The first-half February heavy grade naphtha prices on a CFR Japan basis declined to a premium of $20.00-30.00/mt to Japan quotations to be assessed 45 days before delivery. Supply from other regions was ample. Due to the weaker naphtha market, the price gap against paraxylene (PX) tended to widen and it was pointed out that the operation rates of reformers would go up going forward.

The differentials for LR-size cargoes of naphtha on an FOB Middle East basis were unchanged. The market was capped as supply was expected to increase going forward. Turnaround at two refineries in Saudi Arabia and one refinery in Kuwait finished. Al Zour refinery was also expected to resume operations of one crude distillation unit (CDU) in this month.

Supply volumes of condensate from Saudi Arabia were expected to increase going forward. Jafurah project was expected to start productions of condensate in January and might start supplies in February or later.

Middle distillates: Sales from Korea tend to increase

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis were unchanged. Selling interest from South Korea was active. On the other hand, buying interest from Japan lacked momentum, pushing the market prices lower. In South Korea, one trader sold an MR-size one cargo from a South Korean refinery loading in late January. The price was at a premium of around 50cts/bbl to the quotations on an FOB basis.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis became bearish on strong selling pressures amid sales continuing from South Korea. In the country, S-Oil closed a tender to sell a 0.001% sulfur gasoil cargo loading on Jan 25-29 and a 0.05% sulfur gasoil cargo loading on Jan 17-21 on Wednesday. The 0.001% sulfur gasoil cargo was traded at a discount of $1.05/bbl to the quotations on an FOB basis.

Fuel oil: Fewer supply expected by concern about US sanctions on Venezuela

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged on week. The spot market was quiet. Petroleum companies in Northeast Asia including South Korea were inactive to sell cargoes in the spot market because future prices for 0.5%S fuel oil were in contango in the Singapore market, and refight rates surged.

On the other hand, outlook for a decrease in supply going forward prevailed. The US president Trump imposed sanctions on Venezuela this week, and a decrease in supply of high and low sulfur fuel oil from the country was concerned. Also Pengerang Petrochemical Company Sdn Bhd (PRefChem) in Malaysia gradually raised operation rates of two RFCCs that had stopped due to troubles, and sales of fuel oil cargoes that were not processed were not seen.