Japan's ENEOS to cut weekly wholesale oil product prices by 73 cents/b: sources

ENEOS, Japan's largest refiner, is expected to cut its domestic wholesale base prices for five major oil products by Yen 500/kiloliter (73 cents/b) from the previous week due to weak crude oil market, sources told S&P Global Platts May 25.

The prices will be effective May 27-June 2 for cargoes loaded by tank truck.

ENEOS' domestic rack prices typically follow trends in crude procurement costs rather than movements in global product prices, industry sources said. Its weekly prices are based on the daily average of Platts Dubai and Oman crude benchmarks.

Crude oil procurement costs over May 18-24 fell by an average Yen 390/kl from the previous week, according to Platts calculations.

ENEOS's base price for gasoline is likely to be Yen 61,500/kiloliter, with kerosene at Yen 64,000/kl, gasoil at Yen 64,000/kl, low sulfur A-fuel oil at Yen 62,500/kl, and A-fuel oil at Yen 62,000/kl. A-fuel oil is a blend of gasoil and fuel oil in a 90:10 ratio.

ENEOS declined to comment on its wholesale prices when contacted by Platts.

"Gasoline spot prices had been supported by supply concerns, though demand has been sluggish," a trader based in Tokyo said May 25. "However, the supply and demand balance is currently loosening as traders are rushing to sell their May-delivered cargoes before ENEOS lowers its base prices by Yen 500/kl."

As of May 24, seven crude distillation units have been shut due to planned and unplanned works, resulting in the loss of 30% of domestic refining capacity, and supply has been squeezed. Four of the seven are owned by ENEOS, two by Idemitsu Kosan and the remaining one by Fuji Oil.

Japan's domestic spot gasoline rack price in Chiba was assessed at Yen 61,400/kl May 25, down Yen 400/kl week on week, while the kerosene rack price in Chiba was assessed at Yen 61,200/kl, Yen 1,300/kl lower, Platts data showed.

For gasoil, the rack price in Chiba was assessed at Yen 62,500/kl, down Yen 800/kl week on week, according to Platts data.

ENEOS adds Yen 1,000-1,500/kl to its base prices when selling to traders and distributors, while retail gasoline stations buying directly from ENEOS have to add Yen 3,000/kl to the base price, market sources said.

It has a domestic market share of about 50%, and its prices are closely tracked by two other major refiners in Japan -- Cosmo Oil and Idemitsu. ENEOS and Idemitsu typically announce weekly prices midweek to their affiliated dealers for cargoes loading from the next day until the same day of the following week.

Cosmo reveals its weekly prices Thursday for cargoes loading from Friday until Thursday of the following week.

Idemitsu's and Cosmo's weekly base prices are typically close to ENEOS's prices, multiple sources said.