Gasoline: Early Aug 95RON from Mizushima traded

　 The differential for MR-size cargoes of gasoline loading in Northeast Asia was unchanged on week. However, spot sales volumes were declining due to uncertainty over crude oil supply outlook. This made buying interest from traders with short positions and end-users likely to strengthen.

　 A Japanese oil firm sold an MR-size cargo of 95RON gasoline loading on Aug 4-8 in Mizushima in the spot market Reportedly, the company also had export plans for an MR-size cargo of gasoline loading in late July from another port. However, among Japanese oil firms, some operators were reportedly considering additional procurement of state-owned crude oil reserves in the wake of worsening Middle East tensions. It was pointed out that if petroleum products were refined using state-owned crude oil reserves, there was a possibility of further export restrictions.

　 Vietnamese Petrolimex moved to procure oxy-grade products on a spot basis. The procurement targeted 93.5RON for loading on Aug 10-14 and Aug 26-30, with volumes of 40,000 cubic meters each. This was likely to be used for the production of E10 gasoline, a 10% ethanol blend, which was introduced nationwide in Vietnam.

Naphtha: Market weakens amid declining demand

　 The differential for open-spec naphtha (OSN) on a CFR Japan basis for H1 Sep delivery went down. Weak demand pushed down the market. Naphtha cracker margins using naphtha were deteriorating, and buying interest was retreating. South Korean and Chinese petrochemical manufacturers were proceeding with the procurement and cracking of feedstock other than naphtha. A Chinese petrochemical company stated that it was increasing LPG cracking and minimizing naphtha usage as much as possible.

　 Meanwhile, with future crude oil procurement volumes being uncertain, a decrease in refinery operations and a decline in domestically produced naphtha volumes were a concern. Shipping risks in the Strait of Hormuz and the Red Sea had not improved, and the prevailing view was that it would take time for Middle East cargoes to return to normal supply levels.

　 Regarding the price differential for naphtha and LPG for the first half September cargoes for delivery in Japan as petrochemical feedstock, naphtha was at a premium of $172/mt to propane and at a premium of $122/mt to butane as of last Friday, with LPG continuing to be undervalued compared to naphtha.

Middle Distillates: Gasoil market surges while buying interest for 1H Sep increases

　 The differential for MR-size cargoes of jet fuel loading in Northeast Asia unchanged. With an unclear outlook for the Middle East situation, companies were finding it difficult to move on September-loading sales. Many South Korean oil companies were taking a wait-and-see stance, and many buyers receiving supply from these oil companies under term contracts were also maintaining a wait-and-see stance. S-Oil Co, despite high off-take volumes of Yanbu-origin crude oil, faced an unclear supply outlook for this crude and was reportedly considering adjusting refinery operating rates. It was also pointed out that supply to major traders might decrease.

　 The differential for MR-size cargoes of 0.001% sulfur gasoil loading in Northeast Asia surged. Many oil companies were holding back sales due to uncertainty over crude supply from the Middle East. Amidst this, buyers hastened procurements, and the market gained. In Japan, ENEOS and others were reportedly holding August loading cargoes. They were temporarily suspending sales due to Middle East geopolitical instability.

Fuel Oil: Price gains with tight supply

　The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis went up. Perception of tight supply strengthened amid uncertain situations in the Middle East. Oil companies in South Korea prioritized supply for the bunker market and they were not expected to sell cargoes loading in August. The bunker market was firm in Asia including Singapore due to tight supply.

　 Pengerang Petrochemical Company Sdn Bhd (PRefChem) in Malaysia moved to sell 500,000bbl of low sulfur straight run fuel oil (0.5%S) loading on Aug 6-7 last week. But the refiner stopped the sale due to supply concerns of crude oil and a resumption of operations of two residue fluid catalytic crackers (RFCC) which had been in temporary maintenance.