Asian oil product margins narrowed through last week, dragging down refining margins in the region, as weak demand and healthy supply levels offset the impact of refinery outages.
Asian oil product margins narrowed through last week, dragging down
refining margins in the region, as weak demand and healthy supply levels offset
the impact of refinery outages.
The benchmark Singapore cracking margin--a measure of the profitability of
advanced oil refiners--fell by $1.75 to average $2.70 a barrel against Dubai
crude in the week ended Sept. 13, a 20-month low, according to Facts Global
Energy.
The fall in light distillate cracks--the spread between the prices of oil and
light oil products--was mainly due to gasoline, which reversed most gains from
the previous week's refinery outage.
Gasoline cracks fell from a five-month high, down $3.45 to average $4.82 a
barrel last week, while naphtha cracks fell 44 cents to minus $5.16 a barrel,
FGE said.
It said Asian gasoline cracks fell on news of weaker Indonesian imports in
October and low gasoline margins in the
U.S.
and
Europe
due
to oversupply and high crude oil prices. Additionally, the summer driving
season is ending and gasoline demand will shrink as fuel consumption shifts
towards heating oil in winter.
"Naphtha continues to outperform gasoline, supported by stronger petrochemical
demand moving into the fourth quarter even as European naphtha supplies are
seen tightening, in part due to the shortfall of Libyan naphtha and condensate
exports," FGE said.
Its benchmark 500ppm-sulfur gasoil crack also dropped to a four-month low by 69
cents to average $15.01 a barrel last week, while the jet fuel crack fell by 67
cents to $15.66 a barrel.
While diesel consumption in general remains weak on sluggish economic activity,
China
has
implemented a tax policy reform that is likely to cut jet fuel imports into the
country.
China
was
one of the region's largest jet fuel importers, and a drop in demand will
severely weaken distillate cracks, Singapore-based traders said.
Meanwhile, the crack for 380-cst high-sulfur fuel oil fell to a five-year low
to average minus $15.09 a barrel last week, and could remain at a steep
discount for an extended period until Spring maintenance next year, FGE said.
Oil product margins were also pressured by rising stockpiles in
Singapore
,
which remain at a two-and-a-half year high. While, light distillate stocks were
down by 4.4% to 10.77 million barrels, middle distillate stocks rose to a
seven-month high of 10.79 million barrels, and fuel oil stocks rose 0.75% to a
12-week high of 23.61 million barrels.
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