Asia light ends - Key market indicators this week

Singapore — Asian light ends markets opened lower Oct. 12 as crude oil prices eased following the passing of Hurricane Delta with minimal impact on US refining capacity.

Gasoline prices have softened as support from hurricane-related concerns dissipate, while Middle East LPG supply is looking healthy ahead of ADNOC and Saudi Aramco's acceptance of November term cargo nominations.

December ICE Brent crude futures were down 68 cents/b from the Asian close on Oct. 9 to stand at $42.53/b at 0300 GMT Oct. 12.

GASOLINE

** The November FOB Singapore 92 RON gasoline swap opened Oct. 12 at $45.90/b, down 1.33% from the previous trading session, as international crude oil prices extended losses as supply-side disruptions in the West abated after the passing of Hurricane Delta.

** Hurricane Delta, which peaked as a Category 3 storm, had a smaller-than-expected impact on US refining capacity, with only minimal damage, if any, seen on refineries in Texas and Louisiana. The muted impact from the storm will likely see the US RBOB-Brent crack recede this week, as poor gasoline demand returned to weigh on sentiment. The US RBOB/Brent crack at 0230 GMT Oct 12 was seen at $7.83/b, the lowest in six trading sessions.

** Industry sources are keeping an eye on additional supply from North Asian refineries. Export activity from China is expected to increase for the rest of the month with the country returning from the Golden Week holiday. Taiwanese refiners were heard to be raising run rates in November, with both Formosa and CPC Corp having already sold gasoline and blendstock cargoes for early November loading.

** Japanese refiners will also be raising runs toward year end in a bid to raise kerosene production for winter. The higher run rates will reduce Japan's reliance on imported gasoline, source said.

NAPHTHA

** Physical CFR Japan naphtha benchmark opened Oct. 12 at $406.625/mt, down $7.80/mt from the Oct. 9 Asian close, on lower crude futures and a weaker European naphtha market.

** Weaker sentiment was reflected in the derivatives market in mid-morning trade, with the front month November-December Japan naphtha swap spread at plus $1.75/mt, brokers said. This is 25 cents/mt lower than the Oct. 9 Asian close, S&P Global Platts data showed.

** Poor supply-demand fundamentals for Asia paraxylene crunched the spread between CFR Taiwan-China PX and naphtha CFR Japan cargo by $7.48/mt to $120.205/mt at the Oct. 9 Asian close -- the lowest since Platts began assessing the PX CFR Taiwan/China marker on April 4, 2005.

** 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; it was assessed at $90.50/mt at Oct. 9 Asian close, Platts data showed.

LPG

** The front month November propane CP swap was notionally indicated Oct. 12 at $404/mt, versus $409/mt valued Oct. 9. The butane CP swap was indicated $9/mt above propane.

** The November-December CP propane swap contango was indicated at $3/mt, versus $2/mt the previous session.

** Ahead of ADNOC's acceptances of November nominations this week and Saudi Aramco by next week at the latest, the Middle East market is showing healthy spot supply. Qatar Petroleum's spot tender offering 45,000 mt of propane for Nov. 12-14 loading closes Oct. 14 with next-day validity.

** The offer follows QP's sale via tender of 46,000 mt of propane for Oct. 24-25 loading to Petredec at minus $30/mt to the October CP, FOB, traders said.

** Saudi Aramco has also sold a prompt cargo, comprising 33,000 mt of propane and 11,000 mt of butane, at parity to Saudi CPs to Vitol, heard to supply a commitment for 22,000 mt of evenly split cargo into the Philippines, traders said.

** With QP also having accepted November nominations without cuts and with some advanced loading dates, Asia is well supplied to meet fresh demand from China, and Indian demand if it reemerges for the year end or new year, sources said.