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Indonesia’s Dec gasoline demand allays oversupply concerns in Asia

Indonesian Pertamina’s gasoline demand for December, estimated at 10 million barrels, has improved the year-end outlook for the road fuel amid market expectations of weaker fundamentals on growing Chinese gasoline exports, industry sources said this week.

Jakarta’s ongoing battle against the country’s lofty current account deficit continued to keep many Asian gasoline suppliers on their toes, as state-run Pertamina has been ramping up gasoline production at its domestic refineries as a means of lowering its auto fuel import bills.

However, regional gasoline suppliers could breathe a sigh of relief as Southeast Asia’s biggest energy consumer appears likely to open its doors to ample imports heading towards the year end festive season, which typically sees demand for road fuel rise in line with increased driving activity.

“Pertamina’s import program for December … will provide some support to fundamentals, which if anything will help to prevent a nose dive for gasoline,” a Singapore-based source said.

Indonesia has a strong track record of increasing gasoline purchases towards the year end. In 2018, the country imported 11.87 million barrels in December, up from 11.12 million barrels in November, Statistics Indonesia data showed.


Sentiment in the Asian gasoline market remains fragile, however, amid expectations of a sharp increase in Chinese gasoline exports, market sources said.

Latest data from China’s National Bureau of Statistics hinted at the latter, with crude oil throughput at China’s domestic refineries having jumped 9.2% year on year to 13.68 million b/d in October.

Moreover, as Chinese state-owned refiners have only consumed around 69.7% of total quotas allocated so far this year for gasoline through January-September, market observers anticipate exports in the fourth quarter to surge as refiners ramp up exports to meet the overall quota.

The increased supply could soon weigh on Asian gasoline benchmark prices and crack spreads, which have remained at lofty levels since the start of the month, sources said.

Month-to-date, the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures has averaged $8.91/b, sharply higher than the second and third quarter’s average of $4.85/b and $6.74/b, S&P Global Platts data showed. In November 2018, crack spreads averaged even lower at 45 cents/b.

The recent bullish momentum was attributed to healthy demand from the Middle East and India, but the market’s upside could be limited with more Chinese supply slated to emerge, Asian trade sources said.


Looking ahead, industry sources are awaiting the results of Pertamina’s H1 2020 term negotiations to shed more light on what the oil and gas giant has in store for Asian gasoline.

The region’s largest buyer of gasoline closed several term tenders for January-June last week, seeking a total of 1.19 million barrels/month of 88 RON gasoline and 690,000 barrels/month of 92 RON gasoline.

Notably, the company has considered alternative supply sources of gasoline, sources said, pointing to one of Pertamina’s term tenders for 500,000 barrels/month of 88 RON gasoline, in which it sought cargoes for loading from Australia, Brunei, India and Japan, among others.

In previous term tenders, Pertamina had loaded gasoline from either Singapore or Malaysia.

Offers for the term tenders will remain valid until November 29, according to tender documents seen by Platts.
Source: Platts

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