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Asian gasoline market weakens under weight of rising US inventories

Singapore — The Asian gasoline market came under downward pressure early Thursday as an increase in US gasoline inventories weighed on the paper and physical cracks, despite steady regional fundamentals.

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The September 92 RON gasoline swap crack was between $4.70/b and $4.90/b, based on broker indications Thursday morning. This was lower than the $5.27/b seen at the Asian close Wednesday.

In the physical market, the FOB Singapore 92 RON gasoline crack against the front-month ICE Brent crude oil futures also weakened, with the notional crack at around $7.00-$7.20/b. The physical crack was assessed at $7.66/b at the Asian close Wednesday.

The fall in paper and physical cracks were pressured by a lower RBOB/Brent crack, which as a result of the US stock build was seen lower early Thursday in Asia at around $11.65/b at 0300 GMT in Singapore, S&P Global Platts data showed, sliding further for the third consecutive day.

As Asian gasoline crack tracks the RBOB crack closely, a fall in the US RBOB would exert downward pressure on the Asian gasoline market.

Bucking analysts' expectations of a drawdown, total US gasoline inventories hit the highest level since March 2019, rising by 1.92% to total 235.172 million barrels in the week ended August 2, data from the US Energy Information Administration showed. Stocks were last higher in the week ended March 29 at 236.839 million barrels.

Total US gasoline stocks were expected to fall around 1.4 million barrels on the back of strong summer demand for refined products, a late-Monday analysis by Platts showed.

ICE Brent crude futures and US NYMEX RBOB futures have also declined this week as rising geopolitical tensions between the US and China exacerbated concerns of a prolonged trade dispute between the two countries.

Still, the backwardation in timespreads for Asian gasoline remained firm with balance August/September swap spread at $1.64-$1.65/b, while the September/October swap spread was pegged at plus $1.05-$1.10/b.

At the Asian close Wednesday, the balance August/September swap spread was assessed at plus $1.62/b and the September/October swap spread was assessed at plus $1.09/b, Platts data showed.

--Mark Tan, mark.tan@spglobal.com

--Edited by Nurul Darni, nurul.indriani.darni@spglobal.com