Asia light ends: Key market indicators this week

Singapore — The Asian light ends market was firmer in mid-morning trade Feb. 15, bolstered by gains in international crude markers due to expectations of an upcoming US stimulus package and heightened hopes of combating the COVID-19 pandemic.

Saudi Aramco is due to announce acceptances of March-loading term LPG cargoes by the end of the week, while gasoline is receiving support from a stronger US RBOB market.

April ICE Brent crude futures rose $2.38/b from the Feb. 11 Asian close at 0430 GMT to $63.60/b at 0300 GMT Feb. 15. Singapore was closed for the Lunar New Year holiday on Feb. 12.

GASOLINE

** The March FOB Singapore 92 RON gasoline swap opened the week at around $67.42/b, rising 4.3% from the Feb. 11 Asian close, buoyed by stronger international oil prices and gains in US RBOB.

** The US RBOB-Brent crack rebounded to $9.49/b at 0200 GMT Feb. 15, rising $1.34/b from the Feb. 11 Asian close.

** Hopes of demand recovery around Southeast Asia remain dim. Indonesia placed stricter lockdown measures over Feb. 9-22 across areas in Java and Bali where COVID-19 infections remained high, while in Vietnam, multiple cities and provinces canceled Lunar New Year celebrations amid a new wave of infections.

** Asian gasoline demand is expected to stay subdued this week, with eyes on Myanmar as market participants react to the potential loss in demand that could stem from new sanctions being imposed by the US in response to the military coup. In addition to operational concerns arising from the sanctions, incremental demand from March onwards was marred by uncertainty.

** Several refinery shutdowns in Japan following the earthquake that struck Feb. 13 are expected to curtail gasoline supply and provide some support. Japan's ENEOS shut its 145,000 b/d Sendai refinery and some units at the 270,000 b/d Negishi refinery, while Idemitsu Kosan shut the CDU and some secondary units at the 190,000 b/d Chiba refinery, as well as some secondary units at the 70,000 b/d Keihin refinery operated by Toa Oil.

NAPHTHA

** The physical CFR Japan naphtha benchmark stood at $567.125/mt in early trade Feb. 15, a jump of $20/mt from the Feb. 11 Asian close on the back of the upswing in crude.

** Sentiment was firmer with the front month March-April Mean of Platts Japan naphtha swap spread at $6.50/mt in mid-morning trade Feb. 15, according to brokers. This was 50 cents/mt higher than the Asian close Feb. 11, when it was $6/mt, Platts data showed.

** The improved market strength was also reflected in the physical crack, which rose to $90.125/mt in early trade Feb. 15, from $87.975/mt at the Feb. 11 Asian close, on the back of a narrower front month March East-West spread, Platts data showed.

** The front month March East-West spread -- the premium of CFR Japan naphtha cargo swap over the CIF NWE equivalent -- had crunched to $13.25/mt mid-morning Feb. 15, down from $14.25/mt at the Asian close Feb. 11, Platts data showed. This marked a narrower arbitrage window, and therefore Asia may see fewer cargoes from Europe.

LPG

** Front month March CP propane swaps were notionally indicated Feb. 15 at $582/mt, versus $571/mt valued Feb. 11.

** March propane-butane CP swaps spread indicated at plus $25/mt, steady to previous session.

** As Singapore resumes trading post-Lunar New Year, market expected to remain subdued till end-week, as China returns from long break. With PDH plants due to return from maintenance end-March, importers expected to start buying propane feedstock, to offset heating demand decline.

** Saudi Aramco due to announce acceptances of March-loading term cargoes by Feb. 20, amid expectations of more cuts, following cancelations for February, after the kingdom's decision to limit February and March crude output.

** With Qatari and ADNOC's acceptances for March announced without cuts but some delays, the market is at ease with Middle East supply and any Saudi cuts would not prompt buyers to seek replacement tons, sources said.

** Spot supply emerged from a trader heard selling 44,000 mt evenly split cargo for March 10-11 loading, FOB Kuwait, at a discount to Saudi March CPs, underscoring current double-digit discounts of Middle East cargoes. Kuwait Petroleum Corp. not expected to offer spot March cargoes, a source said, while Qatar Petroleum's sale tender for March 20-24 is due to be awarded Feb. 16.