Asia light ends - Key market indicators this week

Singapore — The Asian light ends market was weaker in mid-morning trade on Sept. 7, tracking losses on the crude oil complex.

November ICE Brent crude futures fell $2.01/b from the 0830 GMT Asian close on Sept. 4 to $42.24/b at 0300 GMT on Sept. 7 on weaker demand fundamentals.

GASOLINE

** The October FOB Singapore 92 RON gasoline swap opened Sept. 7 at around $45.03/b, down 3.42% from the previous trading session as global oil demand concerns pulled international oil prices lower.

** Market participants expect the Asian gasoline complex to stay buoyed on a supported US complex, especially with two Louisiana refineries -- Citgo's 418,000 b/d Lake Charles refinery and Phillips 66's 260,000 b/d Westlake plant -- shut following Hurricane Laura, while the long US Labor Day weekend is expected to build demand-side support. The US RBOB/Brent crack at 0230 GMT Sept. 7 to that end rose to $6.53/b --the highest in six trading sessions.

** Asian regional demand looks set to stay at tepid levels, with hopes of fresh bullish drivers dashed as Australia's state of Victoria announced Sept. 6 that it would extend strict lockdown measures in the capital of Melbourne until Sept. 28. Australia is a large buyer of non-oxygenated gasoline cargoes, and with Australian buyers staying out of the market, competition in other non-oxygenated gasoline outlets such as the Philippines is expected to heat up.

** India's domestic demand is again showing signs of a slowdown, prompting more refiners to offer cargoes into the spot market to offset high inventories. State-owned Hindustan Petroleum Corp. Ltd emerged to sell gasoline via a spot tender after a three-month hiatus, offering a combination of 21,000 mt of naphtha and 7,000 mt of 81 RON gasoline, for Sept. 23-25 loading from Jawahar Dweep and New Pirpau Jetty. The tender closes Sept. 8, with next-day validity.

NAPHTHA

** The physical CFR Japan naphtha benchmark opened Sept. 7 at $391/mt, down $3.425/mt from the Asian close on Sept. 4, due to lower crude prices.

** Limited supply of high paraffin naphtha grades in Asia has boosted the Asian naphtha complex in recent weeks, increasing the physical naphtha crack to over a one-month high of $77.625/mt at Sept. 4's Asian close, S&P Global Platts data showed.

** Asian steam crackers remained keen on maximizing olefins production, as the spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was at $365.50/mt at Sept. 4's Asian close, above the typical breakeven spread of $350/mt, Platts data showed.

** Steady sentiment was reflected in the derivatives market, as front month October-November Japan naphtha swaps remained in a backwardated structure of $1.75/mt in mid-morning trade Sept. 7, unchanged from the Asian close Sept. 4, Platts data showed.

LPG

** Front month October CP swap was notionally indicated Sept. 7 at $364.50/mt, versus $375/mt valued Sept. 4, tracking losses on the crude complex.

** Butane CP swap flipped to a $1/mt premium over propane on Sept. 4 after four months in discount, driven by higher propane supply in the Middle East and US. Butane CP swap was indicated $3/mt above propane in mid-morning trade Sept. 7.

** The October-November CP swap structure was in a contango of $5.50/mt in mid-morning trade Sept. 7, widening slightly from a $5/mt contango Sept. 4.

** More Indian spot import demand emerged with Bharat Petroleum Corp. Ltd. expected to award this week a tender seeking two 44,000 mt evenly split cargoes for delivery to India. This follows IOC's recent purchase of two 44,000 mt evenly split cargoes for CFR Ennore or Haldia arrival in October. Traders are watching if India would seek more for October and November ahead of Diwali.

** Market sources expect UAE's ADNOC to announce its acceptance of October term cargo nominations this week without cuts. Qatar Petroleum had announced acceptance of October term cargoes in line with nominations early September.