Asian gasoline crack spreads gain as impact of US refinery run cuts outweighs stock build

Singapore — Asian gasoline crack spreads found support in a recovery in US RBOB/Brent cracks in mid-morning trade in Asia Thursday after latest data showed US refiners significantly cutting run rates in response to coronavirus-led demand destruction.

The Singapore 92 RON gasoline crack against Brent swap rose 13% to be pegged between minus $6.45/b and minus $6.55/b at 11 am Singapore time (0300 GMT) Thursday, according to indications provided by brokers, after it was assessed at minus $7.47/b at the close of Asian trade at 4:30 pm Singapore time (0830 GMT) Wednesday.

On the physical end, the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures was pegged at minus $6.35-minus $6.45/b at 0300 GMT Thursday, edging up from an assessment at minus $6.87/b at 0830 GMT Wednesday, a 12-year low. The physical crack was last lower on February 10, 2008 at minus $6.99/b, S&P Global Platts data showed

"Overnight RBOB took direction from the data showing the sharp fall in [US refinery] run rates rather than the stock build - people were already expecting the stocks data to be terrible," a market source in Singapore said.

Refinery utilization on the US Atlantic Coast in particular, where the US NYMEX RBOB futures contract is settled, hit a nine-year low at 51.3% in the week ended March 27, Energy Information Administration data released Wednesday showed.

Nationwide US refinery utilization hit a more than two-year low at 82.3%, down 5 percentage points week on week, the data showed.

In the wake of the report, US RBOB/Brent cracks rose 11.92% to minus $2.30/b at 0300 GMT Thursday.

"Driving is terrible everywhere, not only in the US. The surge in gasoline stocks is telling of the bearish situation," another source said.

Total US gasoline inventories rose by 7.5 million barrels to 246.81 million barrels in the week ended March 27, the EIA data also showed.

"Sentiment is heavily bearish. The coronavirus pandemic does not seem to be letting up anytime soon. At the same time, we have supply building all over the place with nowhere viable outlets to go to," the second source added.

Reflecting the growing supply, several sell tenders emerged this week. From India, Nayara Energy Limited offered up to 60,000 mt of 92 RON gasoline for April 20-24 loading, while state-run Hindustan Petroleum Corp. Ltd was offering 17,000 mt of 85 RON gasoline for April 20-22, Platts reported earlier.

In the Middle East, Egypt's EGPC in a rare move was heard offering up to 33,000 mt of 95 RON gasoline for April 16-18, according to open tender seen by Platts. EGPC typically imports gasoline to its ports in Alexandria and Suez, but expectations of further drops in demand were likely to have prompted the company to resell their cargo, market sources said.

With overall fundamentals weakening further, the balance April/May Singapore 92 RON swap spread and May/June swap spread narrowed to minus $2.35-$2.37/b and minus $2.35-$2.40/b, respectively, at 0300 GMT Thursday, according to broker indications. The spreads were assessed at minus $2.10/b and minus $$2.35/b, respectively, at 0830 GMT Wednesday, Platts data showed.