Weekly outlook: Asia gasoline, naphtha, LPG

Singapore — The light ends market opened on a mixed note Monday, with naphtha and gasoline rising in mid-morning Asian trade from support in the West, but LPG declined as ADNOC announced acceptances of May cargoes without cuts.

June ICE Brent crude futures fell 8 cents/b from last Thursday close in Asia to stand at $32.85/b at 0300 GMT Monday, following agreement by OPEC+ to cut production by 10 million b/d for May and June.

Gasoline

** May FOB Singapore 92 RON gasoline swap climbed to around $24.65/b Monday morning, up from $24/b at Thursday's 0430 GMT close.

** India's decision to extend the country-wide lockdown by two weeks from Tuesday is expected to further weaken the Asian gasoline complex, with more prompt exports from Indian refiners being offered on the spot market.

** Indonesia's Pertamina –- the region's top gasoline importer -- is in talks with suppliers to defer its April cargoes, amid reduced demand on tighter domestic travel restrictions. Since last Friday, public transportation in capital Jakarta has been restricted to 6am to 6pm.

Naphtha

** CFR Japan naphtha benchmark opened Monday at $199/mt, up $11.25/mt from Thursday's Asian close, on stronger Northwest Europe naphtha crack.

** The spread between the April CFR Japan naphtha and CIF NWE naphtha rebounded Monday morning to $31.25/mt, up $3.25/mt from Thursday's Asian close as Europe remained weak last Thursday. This, coupled with lower freight, was expected to support further Europe-Asia naphtha flows, as the key LR2 Med-Japan freight was assessed down $50,000 on the day to $4.05 million last Thursday.

** A surplus of Western arbitrage cargoes for H2 May delivery will weigh on cash differentials for CFR Japan, which has dropped to an 8-year and 9-month low of $12.50/mt at Thursday's Asian close.

LPG

** Propane May CP swap notionally indicated Monday at $250/mt, down $14/mt from Thursday's 0430 GMT close.

** CP May/June backwardation at $9.5/mt Monday versus $10/mt Thursday.

** Traders said negative impact of COVID-19 on crude demand is bigger than production cut, though LPG for cooking in India and Indonesia increases when

people stay home. Resumption of Chinese industrial activity continues to boost petrochemical sector's LPG usage.

** ADNOC announced acceptances of May-loading term nominations without cuts. Some lifters had given advanced dates, others had lifting delays. Traders said delays could be due to ADNOC's commitment to spot sale and meet higher Indian spot demand. Advanced dates might be due to producers' previous move to increase output.

** Japan's LPG stocks were at normal or relatively high levels. If demand for cooking rises, importers ready to cover, traders said.

** India lockdown extension expected to further stimulate cooking gas demand. State importers bought by tender 352,000 mt to 440,000 mt and re-tendered for three to five more cargoes. Indian Oil Corp. said its imports for April and May are 50% above normal.

** US propane shipments healthy for May arrivals on open arbitrage to Asia, though less butane expected.