Asian light ends - Key market indicators this week

Singapore — The Asian light ends market firmed during mid-morning trade Oct. 5, as gasoline faced potential supply disruptions from storms in the US, while greater steam cracking demand for naphtha in Europe limited supply flows to Asia.

Middle East LPG supply remained ample with Qatar's acceptance of November term nominations seen without cuts, and some advancements, market sources said.

December ICE Brent crude futures rose to $39.90/b at 0300 GMT Oct. 5 from $39.68/b at the Asian close Oct. 2.

GASOLINE

** The October FOB Singapore 92 RON gasoline swap early Oct. 5 stood at around $44.65/b, rising 1.74% from the previous trading session led by a stronger US RBOB/Brent crack.

** The US RBOB/Brent crack had jumped 16.37% from Oct. 2 to $8.67/b at 0230 GMT Oct. 5, amid concerns of potential supply disruption with two major storms in the US Gulf Coast. According to the US National Hurricane Center, Tropical Storm Gamma as of Oct. 5 is pummeling the Southern Gulf of Mexico with heavy rains, while another storm, Potential Tropical Cyclone 26, is expected to strengthen into a Category 2 hurricane by Oct 9.

** The potential supply disruptions, albeit temporarily, could contribute to a greater drawdown of US gasoline inventories amid the approaching winter-season, market sources said.

** In Asia, supply fundamentals will drive sentiment this week, with thin resupply from China -- amid continued regional demand for motor fuel -- spurring regional players to draw on existing stockpiles. China is celebrating the National Day holidays over Oct 1-8, during which trading activity from Asia's largest exporter of gasoline typically slows, market sources said.

NAPHTHA

** Physical CFR Japan naphtha benchmark early Oct. 5 stood at $388.75/mt, up $5/mt from the Oct. 2 Asian close on higher crude values and a firmer European naphtha complex.

** Firm sentiment was reflected in the derivatives market in mid-morning trade, with front month November-December Japan naphtha swap spread at plus $2.75/mt, brokers said. This is 25 cents/mt higher from the Oct. 2 Asian close, Platts data showed.

** The European petrochemical sector's seasonal demand transition away from propane to more naphtha as feedstock has supported higher naphtha prices, and capped the volume available for arbitrage into Asia.

** Western naphtha arbitrage into Asia was also curbed by the flow of European gasoline, and therefore naphtha blendstocks, into the US, and a lack of fresh US to Asia naphtha flows in the past two weeks, market sources said.

** Tight supply amid firm demand from Asia's steam crackers has kept the physical CFR Japan naphtha crack spread against front month ICE Brent crude futures above the $80/mt mark since Sept. 8, and had firmed in mid-morning trading Oct. 5 to $89.50/mt, up $3.35/mt from the Asian close on Oct. 2, Platts data showed.

LPG

** Front month October CP swap notionally indicated Oct. 5 at $378/mt, versus $373.50/mt valued on Oct. 2. Butane CP swap indicated $8/mt above propane.

** October-November CP propane swap contango indicated at $3/mt versus $2/mt the previous session.

** Qatar Petroleum announced acceptances of November-loading nominations without cuts and delays, with some advanced loading dates heard, traders said, though duration of advancements was unknown. Last month, QP accepted October term cargoes in line with nominations.

** Traders said Qatari supply looks ample as it had also sold via spot tender last week to Petredec -- 46,000 mt of propane for Oct. 24-25 loading, at $30/mt discount to October Contract Price.

** ADNOC's announcement of November nominations is expected next week, followed by Saudi Aramco's. ADNOC announced October-loading nominations without cuts, with most lifters getting advanced loadings.

** Indian importers not yet seeking November or December cargoes, as fire at Indian Oil and Natural Gas Corp.'s Hazira gas processing unit did not disrupt LPG flows, a source said. Before that, Indian importers purchased four cargoes for October-November deliveries.

** China is facing high inventory after recent purchases, market sources said.