Asia Naphtha/Gasoline-Naphtha margin falls, Fujairah stocks rise

Asia’s naphtha crack retreated on Wednesday after inventories at the commercial hub of Fujairah rose to over one-month high and crude oil benchmarks gained.

The refining profit margin for naphtha fell by about $8 to $92.03 per metric ton over Brent crude. The price for second-half March naphtha cargo weakened by about $2 to $714.75 per ton.

Cheaper alternative feedstock propane dented demand hopes for naphtha further adding pressure to the margins.

“In Asia, some headwinds for naphtha are coming from cheap propane with the ratio of propane to naphtha last seen at just 85%, a level that clearly endorses the use of propane over naphtha in flexi-fuel crackers,” analysts at consultancy FGE wrote in a client note late Tuesday.

INVENTORIES

Light distillate stocks at the Fujairah hub rose by 306,000 barrels to 6.932 million barrels in the week to Feb. 14, data from S&P Global Commodity Insights showed.

U.S. gasoline stockpiles plunged by 7.23 million barrels in the week to Feb. 9, according to data from the American Petroleum Institute, a much larger declines than analysts expected.

NEWS

– Prices of naphtha, a key petrochemical feedstock, have jumped in Asia as drone attacks on Russian refineries and the Red Sea shipping crisis have disrupted European shipments, trade sources and analysts said.

– Russia’s export-oriented Ilsky oil refinery plans to resume operations at its damaged primary processing unit this week, two industry sources told Reuters on Tuesday.

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Source: Reuters (Reporting by Mohi Narayan; Editing by Krishna Chandra Eluri)