Asia gasoline price hits 2022 low, cracks turn negative

Quantum Commodity Intelligence - Market anticipation of a big release of fresh Chinese export quotas flooded the Asian gasoline market on Friday, with the price of 92 RON slipping almost 8% down in one session to hit its lowest price yet in 2022.

Gasoline fed off midweek weakness in the middle distillates market, with the flat price succumbing to pressure in the rest of the barrel, with offers through the window adding to the pressure and leaving the flat price down a chunky $7.32/b at $89.97/b.

Friday's moves leave the 92 RON price at its lowest since 28 December, according to Quantum data.

Refining margins have also been squeezed, with the spot crack to Brent down for a third successive session as the pace of the selloff picked up on Friday as it lost $4.30/b to hit a two-week low of just +$0.04/b.

Talk

The move echoes a similar trend seen in the gasoil market this week, where refining margins for 10ppm diesel were cut in half in just two sessions – falling from a massive +$46.53/b to $25.92/b.

It comes as market talk this week has centred around expectations of China releasing a fresh batch of oil product export quotas, with suggestions as much as 15 million mt of transport fuels could flood the market if idle capacity is restarted.

While some analysts were quick to pour water on the rumours – FGE describing such a drastic move as "highly unusual for the Chinese government" – talk around the subject has persisted.

And with Chinese premier Xi Jinping and Russian President Vladimir Putin meeting in Uzbekistan this week as tensions with the west reach their highest in decades, speculation grew about a crude supply term deal between the two.

"Although the global market has been longing for China's spare refining capacity and its fuel supplies since the Russia-Ukraine war began, the timing of such policy U-turn makes little sense to us. If it materializes, a high-level political agenda must be behind it," FGE said.