Indonesia's Ramadan travel ban to reduce weak Asian gasoline demand further: traders

Singapore — A nationwide ban by Indonesia, the region's largest buyer of gasoline, on seasonal travel for Ramadan will significantly add to downward momentum in the already bearish motor fuel market, industry sources said this week.

Indonesian President Joko Widodo announced the ban Tuesday as the country acts to curb the spread of COVID-19. Ramadan, which this year runs April 23-May 23, is peak driving season in Indonesia as city workers return to their home towns to mark the occasion with family.

Indonesia's gasoline imports in April 2019 prior to Ramadan surged 27.56% month on month to 12.236 million barrels. Buoyed by the increased buying, the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures averaged $7.25/b in April 2019, up from $5.79/b the month before, S&P Global Platts data showed.

The same spread has averaged minus $9.15/b since the start of April this year, down from 57 cents/b in March, and the driving ban imposed this year means the demand outlook for Asian gasoline is grim.

"All the news is mostly bad news. With Indonesia out of the picture, it means that the oversupply has nowhere to go," a Singapore-based source said.

Even prior to the ban, Indonesia's fuel consumption was reported to have fallen 16% to 113 million liters/day in early April from 134 million liters/day in mid-March, Fajriyah Usman, spokeswoman for state-owned giant Pertamina, said at the time.

The slump in demand has prompted the company to cut run rates at several facilities, with the 260,000 b/d Balikpapan and 50,700 b/d Sungai Pakning refineries gradually reducing operations and taking their crude distillation units offline and the 133,700 b/d Plaju refinery reducing production gradually, Platts reported earlier.

Gasoline stocks remain ample at above 22 days consumption, and Pertamina has been heard seeking vessels for offshore storage for gasoline and other refined products, sources said.

"We are going to be in this state for a long time," a second trader said.