Japan's ENEOS may hike weekly wholesale oil product prices by Yen 500/kl: sources

ENEOS, Japan's largest refiner, is expected to raise its domestic wholesale base prices for five major oil products by Yen 500/kiloliter (72 cents/barrel) on the week, in response to the stronger crude oil market, sources said Sept. 7.

The prices will be effective Sept. 9-15 for cargoes loaded by tank truck.

ENEOS declined to comment on its wholesale prices.

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. ENEOS raises/cuts prices in units of Yen 500/kiloliter.

Crude oil procurement costs over Aug. 31-Sept. 6 rose by an average of Yen 340/kiloliter from the previous week, according to calculations by S&P Global Platts.

ENEOS' base price for gasoline is likely to be Yen 66,500/kiloliter, with kerosene at Yen 69,000/kiloliter, gasoil at Yen 69,000/kiloliter, low sulfur A-fuel oil at Yen 67,500/kiloliter, and A-fuel oil at Yen 67,000/kiloliter. A-fuel oil is a blend of gasoil and fuel oil in a 90:10 ratio.

Gasoline prices have been supported compared to other products after a major refiner bought 2,000 kiloliter of gasoline in the waterborne market on Sept. 3, multiple sources said Sept. 7.

Such a procurement by the refiner, which is seen as the first move in September, pushed up the gasoline rack market, though demand has been weak due to the COVID-19 emergency measures, the sources said.

"With the refiner procuring gasoline domestically, surplus cargoes will disappear from the market and the prices will be supported in September," a trader based in Tokyo said Sept. 7.

"The gasoline price is likely to remain at a level Yen 300-500/kl higher than the ENEOS' base price."

Japan's domestic spot gasoline rack price in Chiba was assessed at Yen 66,800/kl Sept. 7, up Yen 1,600/kiloliter week on week, while the kerosene rack price in Chiba was assessed Yen 1,200/kiloliter higher at Yen 67,000/kiloliter, Platts data showed.

For gasoil, the rack price in Chiba was assessed at Yen 68,600/kiloliter, up Yen 2,300/kiloliter on the week, according to Platts data.

ENEOS adds Yen 1,000-1,500/kiloliter to its base prices when selling to traders and distributors, while retail gasoline stations buying directly from ENEOS have to add Yen 3,000/kiloliter 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 on a Thursday for cargoes loading from Friday until Thursday of the following week.

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