FOB Singapore 92 RON gasoline hits 18-year low below $25/b on coronavirus fears

The price of FOB Singapore 92 RON gasoline, the most liquid gasoline benchmark in Asia, fell below $25/b for the first time since 2003 at the Asian close Thursday to be assessed at $23.07/b, an 18-year low, as concerns over coronavirus-led demand destruction fueled bearish sentiment.

The FOB 92 RON gasoline price was last lower on February 22, 2002 at $22.90/b, S&P Global Platts data showed. It last fell below $25/b in May 2003.

The plunge in prices is the result of three main factors, market sources said, with the first being a bearish demand outlook for the region, prompted by the continued spread of the coronavirus.

"There is a concern that the official infected numbers will spike as more and more people are tested, prompting more extensive measures that will hamper demand," a gasoline market source said

Indonesia, the region's largest buyer of gasoline, has seen an exponential number of coronavirus cases in the past week, igniting concerns that driving might slow before the Muslim holy month of Ramadan -- when gasoline demand typically peaks.

As of Thursday, the number of infected cases has jumped to over 300, with 25 deaths, according to media reports.

The second factor is the collapse of the US RBOB/Brent crack, which has bucked the seasonal trend of increased gasoline demand.

"The US isn't doing very well either. Now with many people not driving due to the spread of the virus, demand is lagging," a second source added.

The US RBOB/Brent crack has averaged $1.45/b since the start of the week, sharply lower than the $9.64/b it averaged the previous week.

The Asian gasoline complex tracks the US RBOB/Brent crack closely with a drop in the latter typically exerting heavy downward pressure on Asia

Lastly, OPEC output strategies have also weighed on gasoline prices, with Brent crude futures having already dipped below $30/b.

Saudi Arabia's Ministry of Energy earlier this week instructed Saudi Aramco to continue to supply 12.3 million b/d of crude to the market "during the coming months" – suggesting that the kingdom does not intend to back down in its oil-price war with Russia.

"There are a number of reasons why gasoline is faltering now. There is a lot of uncertainty and the mood is overall very bearish," the second source said.

Matching the downward spiral in prices, higher octane grades such as the FOB Singapore 95 RON and 97 RON gasoline were also assessed at 18-year lows at $24.62/b and $25.64/b, respectively.

Prices of FOB Singapore 95 RON and 97 RON gasoline were last lower on February 26, 2002 at $24.40/b and $25.45/b, respectively, Platts data showed.