Asia gasoline cracks hit six-week low as Japan extends lockdown, global cracks sink
Quantum Commodity Intelligence – Gasoline cracks in Asia fell to a near six-week low on Tuesday as weaker naphtha demand and lower consumption in the region hit margins, while the so-called US summer 'driving season' winding down also added to the downward pressure.
After a burst of liquidity last week in the MOC trading window, spot activity has been thin so far this week for gasoline cargoes out of Singapore, with no deals reported on Tuesday.
And paper cracks fell amid news that Japan has extended its state of emergency in Tokyo for another two weeks.
Q4 cracks for gasoline RON 92 specification versus front line Brent fell $0.40/b to $6.36/b on Tuesday, the lowest since late June and well off the $7.75/b high seen this year in late July – before China tightened restrictions to curb the spread of the delta variant.
That has started to arrest a bull-run that got underway in mid-June, when prompt cracks were below $5/b.
In Europe and the US, cracks also weakened by 1630 Singapore time, according to Quantum data, with RBOB and EBOB paper cracks for September losing $0.50-80/b.
While Indian demand remains solid in the region for the first two weeks of August – at above pre-pandemic levels according to preliminary data from refiners released Monday - Japanese imports remain low.
Mobility
Japanese mobility has fallen in August versus July, with data published by Google showing an average 9.6% decline versus a January 2020 baseline. That compares with July, which was 8% under the same month. Notably, data for the past week has shown an 11% decline.
"The Delta variant is causing an unprecedented number of cases in our country," Prime Minister Yoshihide Suga said, adding that serious cases were increasing rapidly and putting the healthcare system under pressure.
Meanwhile, intercity mobility in China collapsed in the seven days to August 15 compared with the average in July and the first week of August, according to data from technology company Baidu, with mobility down 15% on the week and 37% from the July average.
The statistics, which measure travel into and out of cities and major urban centres, also show rolling seven-day averages in the last week, hitting the lowest level since the start of the dataset in March this year.
On the bullish side, Chinese exports of gasoline are expected to decline due to lower quotas and one of the biggest recipients of Chinese refined fuel – Malaysia – started to ease restrictions after hospitalisations started to decline.
Elsewhere in Southeast Asia, there is growing concern about the effectiveness of one of two main vaccines – Sinovac – with a study published last week showing antibodies start to fade below detectable levels after six months.
