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Highlights

Singapore gasoline has pushed past gasoil to become the most lucrative product of the barrel for the first time in five years as diesel -- a long-time favorite among refiners that is slowly losing its luster -- struggled to pick up pace due to ample supply coming on stream from greenfield refineries in the Middle East, Platts data showed Monday, March 30.

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The FOB Singapore 92 RON gasoline swap crack against front-month Dubai swap closed at $14.70/barrel last Thursday, compared with $14.13/b for the 500 ppm sulfur gasoil swap crack, putting the gasoline margin 57 cents/b above gasoil.

The spread between the automotive fuels narrowed to a 23 cent/b premium last Friday, with gasoline over gasoil.

But over longer terms, gasoil remains the king of the barrel -- for now.


Monthly average gasoil cracks were steady at $15.43/b between January and March to date, but gasoline cracks surged -- leaping from a January average of $8.33/b to $11.39/b in February and $13.74/b in March to date.

The recent strength in gasoline demand is due mainly to regional turnarounds that have caused supply to dry up.

Compounded with the recent departure of gasoline cargoes to the US to feed strong gasoline demand ahead of the summer driving season, this has further limited availability in the region. Although Indonesia, the region's biggest gasoline buyer, is not seeking many spot cargoes, Indian demand has been on the rise, trading sources said.

The recent weakness in Western crude benchmarks, which has also pulled down gasoline values, is most likely the reason India has ramped up its gasoline purchasing. Indian Oil Corp. has issued tenders to buy up to 68,300 mt of 91 RON gasoline and reformate to date for delivery over April.

Among refineries shut for maintenance, China's West Pacific Petrochemical Corp, or WEPEC, plans to shut its 10 million mt/year refinery in northeastern China's Dalian province April 15 for a full turnaround of 40-45 days, a refinery source said last week.

WEPEC, which used to export several cargoes of gasoline each month, will also not start up its new 1.5 million mt/year continuous catalytic reformer this month in view of the full turnaround.

The CCR will add around 40,000-50,000 mt/month of gasoline production to the refinery, of which 30,000 mt will be exported.

NO CLAWBACK IN GASOIL CRACKS

The FOB Singapore gasoil cracks have failed to claw back to levels of $17-$18/b seen in the first quarter of 2014 as supply from new refineries in the Middle East has been capping the market, as has a year-on-year fall in import volumes from Indonesia.

"The planned new refineries are mostly gasoil machines," said a Singapore-based trader.

While refinery maintenance in North Asia and India has reduced exports of March and April loading cargoes causing some supply tightness and stronger demand from Europe and the US during winter opened the arbitrage from Asia and the Middle East to Europe last month, cracks still failed to pick up significantly.

South Korea has been exporting more gasoil due to two new condensate splitters that started up in the second half of last year.

Saudi Arabia has reduced imports of 500 ppm sulfur gasoil since the 400,000 b/d Satorp refinery in Jubail came on stream in September 2013, and the kingdom is expected to further cut imports in the coming summer following the startup of the 400,000 b/d Yasref refinery in Yanbu late 2014.

Both refineries are co-owned by Saudi Aramco.

In addition, the UAE's ADNOC resumed exports of 10 ppm sulfur gasoil in March after almost a year of absence.

ADNOC has so far sold 285,000 mt of ultra-low sulfur diesel from its newly expanded refinery in Ruwais that started commercial operations last month.

Its first two cargoes are expected to flow to Brazil.

--Wendy Cheong, wendy.cheong@platts.com
--Nora Jumaat, nora.jumaat@platts.com
--Edited by Wendy Wells, wendy.wells@platts.com