Gasoline: Oxy market down on surfacing sense of ample supply

The differential for MR-size gasoline on an FOB Northeast Asia basis for oxy grade softened. A sense of ample supply began to strengthen in the Asian region, which put downward pressures on the market. GS Caltex in South Korea sold one MR-size cargo of 92RON oxy gasoline loading on May 11-20 at a slight premium to the Singapore quotations on an FOB basis via a tender closed on Apr 23. South Korean, Taiwanese, and Singaporean oil firms intensified crude oil procurement. Refinery run rates bottomed out, and supply concerns eased. Meanwhile, though there were no gasoline exports from China, sales of MTBE as a blending component continued, which seemed to be supporting oxy gasoline production activities.

Naphtha: OSN Capped by procurement for prompt cargoes in sight and stable refinery runs

The first half June open-spec naphtha prices on a CFR Japan basis were weighed. A sense of tight supply/demand fundamentals had eased. Some end-users were heard seeking swaps for May-arrival cargoes, suggesting a sense of oversupply in some areas. The stabilization of refinery operations after a period of lower run rates was also seen as a positive factor for naphtha supply.

The first half June heavy naphtha prices on a CFR Japan basis went down. The aromatics market remained weak. Market sources noted that some oil companies were lowering operational rates of reformers to their minimum. Under such circumstances, evaluations for heavy naphtha were reportedly capped. In fact, hardly any deals for heavy naphtha were heard recently.

China's ethylene export sales were likely to continue, especially from companies operating ethane crackers. These companies reportedly purchased a large volume of ethane from the US to maintain high operating rates for their ethane crackers. However, sluggish derivative demand could intensify selling pressure for ethylene.

Middle distillates: GS Caltex sells late May loading cargo of 0.001%S gasoil

The differentials for MR-size jet fuel on an FOB Northeast Asia basis retreated. The market was supported compared to before the worsening Middle East situation, but inquiries from airlines remained thin. Meanwhile, as the 'regrade,' which represents the price difference between jet fuel and gasoil in the Singapore futures market, was substantially positive, oil firms intensified the refining and sales of jet fuel. Furthermore, due to historically high Asian market prices, there were many inflows of cargoes from outside the region, leading to slack supply/demand fundamentals. In the spot market, several South Korean oil firms were showing an aggressive stance toward exports.

The differentials for MR-size 0.001% sulfur gasoil on an FOB Northeast Asia basis substantially retreated. Many selling interests were heard from Asian oil firms. Views emerged that tightness in crude oil and product supply would recede following reports of an extension of the ceasefire agreement between the US and Iran. Sellers seemed to be hastily moving to offload cargoes before a market collapse. A South Korean trader pointed out that the situation where high profits could be enjoyed through exports was coming to an end. In the spot market, GS Caltex in South Korea sold one MR-size cargo of 0.001% sulfur gasoil loading on May 26-30 at a premium of $2.00/bbl to the quotations on an FOB basis via a tender closed on Thursday.

Fuel oil: Fears of market collapse, selling dominant in Singapore market

The differential for MR-size 0.5% sulfur fuel oil on an FOB South Korea basis remained unchanged. However, increased regional supply, centered on the Singapore market, was putting downward pressures on the market. Geopolitical tensions in the Middle East had eased somewhat, and oil firms in Asia were increasing refinery run rates; as previously reported, the supply of fuel oil was expected to increase going forward. As the fuel oil market was softening, traders who had previously been reluctant to sell due to supply concerns seemed to be hastily offloading their inventories. While selling interest was increasing, bunker demand remained low, and supply/demand fundamentals were slack.