Asian gasoline set to plunge to 4-year lows as crude plunges: sources

Singapore — Asian gasoline market participants displayed highly risk-averse behavior during the Asian morning trade session on Monday, amid increased volatility from the plunge in global oil markets over the weekend that sent Asian gasoline values to open at its lowest in nearly four years, industry sources told S&P Global Platts.

The values of all three Asian physical gasoline benchmarks -- FOB Singapore 92 RON, 95 RON and 97 RON gasoline -- were notionally pegged at around $40.15/b, $42.00/b, and $42.85/b, respectively, Platts estimates, together with brokers' data, showed.

This represented a fall of around 25%-32% for each grade, even after each gasoline grade was assessed at a 15-month low of $54.84/b, $56.66/b, and $57.52/b, respectively, at the 0830 GMT close of Asian trade Friday.

On the derivative front as well, front-month April 92 RON gasoline swap was pegged around $39.40/b-$39.50/b Monday morning. This is the first time since early 2016 that the front month gasoline derivative was pegged below the $40/b mark, Platts data showed.

"The overnight plunge made it extremely hard to place the [crack and price] level this [Monday] morning," one Singapore-based broker said. "People are still digesting the impact," the source added.

Gasoline prices fell sharply Monday in line with the roughly 30% tumble seen in crude futures, the latter stemming from news that Saudi Aramco would cut its Official Selling Prices for its April crude delivery.

The slash in OSP also followed an impasse by OPEC and its allies, amid Russia's unwillingness to extend production cuts to support a coronavirus hit oil complex.

ICE front-month Brent as a result fell $14.25/b at the start of Asian trading to $31.02/b, before climbing back to trade around $35.22/b at 2238 GMT, Platts reported previously.

But against a backdrop of cheaper cargoes, Asian gasoline traders were still bearish, noting that the complex was being pressured by a constant stream of cargoes from China that was quickly outstripping demand.

"It is likely that [gasoline] cargoes from China in March hit a new record high, given the number of ships being chartered," one shipping source said.

Over last week, at least six LR tankers and five MR-sized tankers were noted to have been chartered to load gasoline from China in early to mid-March, the source added.

Exacerbating matters, traders also anticipated a further slowdown should the number of confirmed COVID-19 cases in the region accelerate.

"If the cases in other regions such as Indonesia increase, pre-Ramadan [Muslim fasting month] buying will likely be low," a gasoline trader said.

As of early Monday, the virus has spread to a total of 109 countries and territories, with over 110,000 confirmed cases, according to media reports.