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Asia Naphtha/Gasoline-Naphtha margin down, backwardation narrows

Asia’s naphtha markets started the month in losses after registering a two-fold decline in June due to slow demand from the petrochemical sector and rising supplies from Russia, traders and analysts said.

The crack fell by $2.35 to about $29 a metric ton over Brent crude on Monday and the price structure narrowed by 75 cents in backwardation.

“Liquidity on naphtha has increasingly been impacted by the continued inflow of Russian naphtha to Asia. Many buyers in the Far East have been lifting spot naphtha tonnes from commercial tanks in the Singapore Strait and Fujairah, which would not be reflected on paper,” analysts at consulting firm FGE said in a note.

However, the fall in the markets could be cushioned as attention turns to second-half August to first-half October arrivals, the consultancy said.

“This period coincides with a seasonal increase in petrochemical demand and margins as manufacturing activity ramps up ahead of year-end when demand for consumer goods typically picks up,” FGE added.

NEWS

– Indian refiners have begun paying for some oil imports from Russia in Chinese yuan, sources with direct knowledge of the matter said, as Western sanctions force Moscow and its customers to find alternatives to the dollar for settling payments. nL4N38J1T7

– Kuwait Integrated Petroleum Industries Company (KIPIC) put out a fire at the al-Zour refinery without any reported injuries, a company spokesperson said. The refinery is back to work normally, with production and export operations continuing, Abdullah Fahad Shabib Al-Ajmi added.

– Oil rose on Monday after top exporters Saudi Arabia and Russia announced supply cuts for August, overshadowing concern over a global economic slowdown and the potential for further increases to U.S. interest rates. O/R
Source: Reuters (Reporting by Mohi Narayan; Editing by Dhanya Ann Thoppil)

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