The Asian market exhibited a recovery on the back of firm regional demand amid tightening sentiment fueled by the onset of autumn maintenance in the region.
The Asian gasoline market showed a strong recovery during September, supported by increased demand from several countries in the region, mainly from Indonesia and India, where demand continued on the rise after exhibiting a sharp increase of more than 20% during August.
Another positive factor was the falling exports from South Korea’s refineries due to stronger domestic demand, which, along with operational issues in the RFCC unit in the Taiwanese refinery, contributed to tightening sentiment ahead of the autumn maintenance season in the region.
The gasoline crack spread against Oman crude in Singapore averaged $12/b in September, gaining more than $4 compared with the previous month’s level.
The Singapore naphtha crack reversed its downward trend, recovering more than $3/b over the month, on the back of easing oversupply in the previous month with lower inflows from the West, as improving petrochemical margins in the European market kept volumes there.
On the other hand, a potential upside in the naphtha crack spreads was limited due to the cheaper LPG competing with petrochemical feedstocks amid some cracker maintenance.
At the middle of the barrel, the gasoil crack spread exhibited some recovery on the back of a more balanced market with stronger regional demand amid the onset of the heavy autumn maintenance season in the region.
Demand continued to show a typical seasonal rise, mainly in China and India, where the heavy monsoon season hit domestic demand in previous months. Additional support came from the continued decline in exports from South Korea, following domestic demand growth that reached record-high levels in August.
The gasoil crack spread in Singapore against Oman averaged around $11.5/b in September, gaining more than $1 compared with the previous month’s level.
The Asian fuel oil market strengthened, supported by stronger demand seen in Singapore and higher buying interest from Pakistan.
The fuel oil crack spread in Singapore against Oman averaged about minus $4/b in September, gaining more than $2 from the previous month. An additional uptick was somehow capped by expectations of higher inflows from the West in the coming weeks.