Gasoline non-oxy grade prices retreat, while bullish factors seen for oxy grade.

　 The differential for MR-size cargoes of gasoline loading in Northeast Asia for non-oxy grade significantly retreated. The monthly spread was in deep backwardation, with premiums compressed for later August loading dates. Bullish factors were seen for oxy grade. Indonesia state-owned Pertamina conducted a buy tender for 90RON and 92RON gasoline for August delivery. Crude throughput was reportedly still low. In addition, at the 360,000 b/d Balikpapan refinery, the start-up of a new residue fluid catalytic cracker (RFCC) was delayed. According to a market source, although they commenced the start-up in mid-July, several issues were found, delaying the start-up to the end of August. PRefChem in Malaysia halted operations of its No.1 RFCC on the morning of Jul 20. The unit had just restarted in early July.

Naphtha: Traders rush to short-cover in Singapore

　 The differential for open-spec naphtha (OSN) on a CFR Japan basis for H1 Sep delivery surged. The Middle East situation remained tense, and tight supply of naphtha and crude oil was putting upward pressure on Asian naphtha prices. Additionally, traders were reportedly rushing to short-cover in the Singapore market. Furthermore, a market source also pointed out the possibility that refinery run rates in Asia could decrease due to a shortage of crude oil procurement, potentially impacting naphtha production. S-Oil in South Korea appeared to be moving to sell light naphtha for domestic crackers. A Market source expressed the view that sales to parties other than KPIC, which is connected by pipeline, were also possible. A South Korean oil firm viewed that, considering the Middle East situation, it was highly possible that the government would extend the naphtha export ban. The differential for heavy naphtha on a CFR Japan basis for H1 Sep delivery also surged. In Asia, available cargoes are limited, and supply is tight. The US, also a supply source, reportedly had limited export capacity due to the gasoline demand season.

Middle Distillates: Deep backwardation for Aug/Sep spreads observed

　 The differential for MR-size cargoes of jet fuel loading in Northeast Asia softened. In the Singapore paper market, backwardation for Aug/Sep widened, indicating a stronger sentiment for future price declines. Additionally, the arbitrage window to Europe narrowed, and that to the US remained unstable.

　 The differential for MR-size cargoes of 0.001% sulfur gasoil loading in Northeast Asia fell sharply. In the Singapore paper market, the monthly spread for Aug/Sep was in backwardation. Furthermore, with heightened risks for tanker navigation off the Red Sea, many traders refrained from procuring cargoes from Asia for Europe, leading to a situation where cargoes tended to accumulate in the Northeast Asian region.

　 The differential for LR-size cargoes of jet fuel and gasoil loading in the Middle East both climbed. Yemen's Iran-backed Houthi rebels declared a naval blockade against Saudi Arabian vessels. This created uncertainty regarding supply from the Red Sea side, and prices were pushed up.

Fuel Oil: Backwardation widens further

　The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis softened. Buying interest for H2 Aug loading cargoes was retreating on the back of backwardation in the futures market. In the Singapore paper market, the monthly spread for 0.5% sulfur fuel oil for Aug/Sep widened into backwardation of around $50/mt. Consequently, traders viewed the procurement of H2 Aug loading cargoes as a risk, refraining from new purchases.