Asia light ends: Key market indicators for Dec 13-17

Asia's light ends markets opened the trading week starting Dec. 13 on higher levels due to a rebound in crude prices.

Gasoline was expected to be propped up by driving activity for the festive season, while LPG was boosted by keen demand for early-January cargoes following some delays in Middle East cargoes. A six-week high in the reforming spread was expected to support naphtha demand as a gasoline blendstock.

Front-month February ICE Brent crude futures stood at $76.10/mt at 0413 GMT Dec. 13, up from $74.26/b at the 0830 GMT Asian close Dec. 10 as risk-on sentiment in the broader financial market lifted asset prices despite ongoing risk from the omicron coronavirus variant.

Gasoline

** The January FOB Singapore 92 RON gasoline swap rose at the start of the week, pegged notionally higher at around $86.09/b early Dec. 13, up 2.10% from the previous session, Platts data showed.

** The US RBOB-Brent crack eased slightly at the start of the trading week, and was at $14.67/b at 0230 GMT Dec. 13, down 1.59% from the previous session but 9.48% higher than the month-to-date average assessment of $13.40/b.

** Pockets of gasoline demand emerged this week in Asia, as more spot buy tenders for January loading cargoes were seen from Indonesia's Pertamina and Vietnam's Petrolimax.

** Most recently, Indonesia's Pertamina was seen on the spot market seeking one cargo of 200,000 barrels of 88 RON gasoline and two cargoes of up to 500,000 barrels each of 92 RON gasoline, for January loading, in a tender closing Dec. 14, according to market sources.

** Term negotiations concluded for Indonesia's Pertamina, Southeast Asia's largest gasoline buyer, and was heard awarded at a premium of $0.70-$0.90/b to MOPS.

** Market activity continues to be relatively muted towards the tail end of the year, but market participants were optimistic that the Christmas festive season will spur driving activity.

Naphtha

** The physical C+F Japan naphtha marker rose $15.725/mt from the previous Asian session to $718.875/mt in mid-morning trade Dec. 13 on higher crude.

** Stable sentiment was reflected in naphtha swap as brokers pegged the front-month January-February Mean of Platts Japan naphtha swap time spread at $11.75/mt in mid-morning trade Dec. 13, up 25 cents/mt from the previous close, S&P Global Platts data showed.

** Buying activity for first-half February delivery naphtha into North Asia is slated to begin this week as the trading cycle rolls forward on Dec. 16.

** Sentiment on Asian naphtha market was dampened amid increasing Western arbitrage supply and low LPG prices.

** Meanwhile, naphtha blendstock demand was expected to firm as the reforming spread -- the difference between Singapore 92 RON gasoline and Singapore naphtha derivative -- grew 87 cents/b week on week to $8.70/b on Asian close Dec. 10, hitting a six-week high, Platts data showed. The spread was last higher on Oct. 29 at $9.56/b. Currently, the wide spread makes it economically viable for gasoline producers to use naphtha as a blendstock.

LPG

** Front-month January propane CP swaps were indicated at $718/mt Dec. 12, up from $696/mt the previous session, surpassing the upswing in crude. This is also $77/mt below December term CP, indicating firm sentiment for the January market.

** Strength was reflected in the swap spreads, particularly in the front of the curve as many buyers were keen on loading cargoes for early January. The January-February CP propane swap time spread was pegged at a backwardation of $36/mt, wider by $11/mt from the previous session, while further down the curve, the February-March CP propane swap spread was at $32/mt, down slightly from $35/mt the previous session.

** Buying interest in propane as a possible alternative steam-cracker feedstock to naphtha had propelled the swap spread propane and naphtha to flip back to a premium, trade sources said. The front-month FEI propane/MOPJ naphtha spread was $16.50/mt Dec. 10, up by $18.75/mt from the previous session, Platts data showed. However, LPG is typically viable as an alternative feedstock when 90% or lower than the price of naphtha.

** Saudi Aramco is expected to announce acceptances of January-loading term cargoes towards the end of this week.