Asia light ends - Key market indicators this week

Singapore — Asian light ends markets were mixed in mid-morning trade in Asia Oct. 19, with gasoline marginally lower than at the end of last week as a COVID-19 resurgence prompted concerns of tighter movement restrictions in Europe, while LPG was balanced between recovering demand and ample Middle East supply, though US shipment uncertainties persist amid looming hurricanes.

The November-December Mean of Platts Japan naphtha swap flipped to contango on weak sentiment as ample prompt supply from the Middle East outpaced firm regional demand, while December ICE Brent crude futures were down 22 cents/b from the previous Asian close at $42.72/b at 0335 GMT.

GASOLINE

** The November FOB Singapore 92 RON gasoline swap opened Oct. 19 at $44.95/b, down 0.56% from the previous session, as renewed concerns over coronavirus outbreaks globally kept international crude prices suppressed.

** The surge in COVID-19 cases added downward pressure on the US RBOB-Brent crack as earlier support from a series of heavy storms dissipated and focus returned to tepid demand as winter approaches. The US RBOB-Brent crack was seen at $6.15/b at 0230 GMT, the lowest since Sept. 9, when it touched $6/b.

** Sentiment was expected to remain weak in Asia this week as industry participants eyed supportive cues amid an uncertain demand-side outlook. Although demand from large consumers of gasoline, China and India, has shown robust recovery, appetite still lags from other key importers such as Indonesia and Malaysia.

** Malaysia is continuing to grapple with a spike in coronavirus infections, which industry sources said could pressure the government to extend lockdown measures if cases continue to rise.

** Indonesia was heard planning to keep November import volumes at around 9 million barrels, below the 2019 monthly average of 10.294 million barrels.

NAPHTHA

** The physical CFR Japan naphtha benchmark opened Oct. 19 at $397.50/mt, down $1.50/mt from the Oct. 16 Asian close, on softer crude futures.

** Weak sentiment was reflected in the paper market -- the front month November-December MOPJ naphtha swap timespread narrowed to 50 cents/mt at the Oct. 16 Asian close, down 75 cents/mt day on day. In mid-morning trading trade Oct. 19, brokers said the structure had flipped to contango, and pegged the spread at minus 25 cents/mt. Recent exports by ADNOC added to regional supply.

** During trading for the November-delivery cycle, cash differentials for spot paraffinic naphtha parcels fell 41.8% to an average of $3.11/mt over Oct. 1-15 against benchmark Mean of Platts Japan naphtha physical assessments, CFR, down from the $5.34/mt averaged over Sept. 16-30, S&P Global Platts data showed.

** The downtrend persisted at the start of the H1 December delivery cycle on Oct. 16, with the cash differential assessed 50 cents/mt lower on the day at 50 cents/mt against MOPJ naphtha physical assessments, CFR, Platts data showed.

LPG

** Front month November CP propane swaps were notionally indicated mid-morning Oct. 19 at $421.50/mt, versus $422 /mt on Oct. 16. Butane CP swaps were indicated $10/mt above propane.

** The October-November CP propane swap contango was indicated at $4/mt, versus $6/mt the previous session.

** Saudi Aramco's November-loading term nomination acceptances -- expected early this week -- are being watched for possible cuts, in view of LPG demand for the long-delayed Jizan refinery and petrochemical project due to start in Q1 2021. But some market sources said Aramco is unlikely to cut, as was seen for October.

** Aramco Trading Co. is due to award a purchase tender for 200,000 barrels of evenly split LPG loading early November, which traders said is to feed into the alkylation unit at the Jizan complex.

** With the OPEC+ monitoring committee to meet Oct. 19, some OPEC+ members acknowledge the alliance's output cuts may need to be extended, rather than eased as planned, at year end, with the oil market's recovery from the coronavirus pandemic slower than hoped, while US hurricane season continues to stir shipment uncertainty.

** Renewed Chinese demand and India's recent purchases pushed prices to nine-month highs last week, before end-week profit-taking and an unwinding of arbitrage positions dampened prices, brokers said.