Asian gasoline crack spreads rebound in wake of surprise US stock draw

The Asian gasoline market moved higher in mid-morning trade in Asia Thursday after an unexpected gasoline stock draw in the US hinted at a return of consumer demand.

The Singapore 92 RON gasoline crack against Brent swap was pegged by brokers at minus $1.80-minus $1.90/b at 10:30 am Singapore time (0230 GMT) Thursday, up 32% from the assessment at minus $2.70/b at Wednesday’s Asian close.
The physical market also traced the uptick, with the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures seen at minus 60–minus 70 cents/b at 0230 GMT, after being assessed at minus $1.23/b at the 0830 GMT close of Asian trade Wednesday.

The physical crack was last seen above minus $1/b on March 18, when it was assessed at minus 96 cents/b, S&P Global Platts data showed.

Market participants attributed the recovery to support from the West, which saw upward momentum following an unexpected gasoline stock draw in latest US Energy Information Administration data.

US gasoline stocks fell 3.7 million barrels to 259.57 million barrels in the week ended April 24, posting the first decline since mid-March, the EIA data showed. Analysts polled by Platts on Monday had been expecting a 2.9 million-barrel build.

The decline was attributed to refined product demand emerging as several US state and local governments this week begin relaxing stay-at-home orders imposed to contain the spread of COVID-19.

Total product supplied, a proxy for demand, rose 1.66 million b/d to 15.76 million b/d in the week ended April 24, the biggest increase since late March, indicating the worst may be behind energy markets in terms of demand destruction resulting from COVID-19 lockdowns, Platts reported earlier.

ASIA OVERSUPPLIED
However, Asia remains steeped in oversupply, which is likely to cap any sharp resurgence in the region’s gasoline complex, market sources said Thursday.

“The focus is starting to return toward the summer driving support from the US, but we should still note that here in Asia, there is oversupply,” one Singapore-based trader said.

Several counties in the region including Malaysia, Singapore and Thailand have extended domestic travel restrictions to mid-May or early June, setting the stage for persistently tepid demand.

Japan’s April gasoline demand was estimated 666,719 b/d, down 22% from a year earlier, the country’s largest refiner JXTG Nippon Oil & Energy said Tuesday.

Meanwhile, supply continues to build in the region, with refiners offering several spot cargoes.

Indian state-owned MRPL late Wednesday offered 35,000 mt of 95 RON gasoline for loading over May 24-26 from New Mangalore in a tender that closes May 4 with same day validity, the day after fellow Indian refiners Nayara and BPCL offered a total of up to 110,000 mt of 92 RON gasoline via spot tenders, Platts reported earlier.
Source: Platts