Asian gasoline cracks extend bull run on firmer regional demand, US cracks

Quantum Commodity Intelligence - Spot Asian gasoline cracks for 92 RON hit their highest level in multiple months on Monday, on firmer regional demand and as cracks in the US rose on Friday ahead of Independence Day travel, Quantum data shows.

Spot cracks for RON 92 basis FOB Singapore versus cash Brent rose above $9/b on Monday by 1630 Singapore time for the first time this year, as a return to regional demand underpins the upward trajectory.

There was strong bidding heard in the Platts trading window with a deal reported at $85.40/b FOB Singapore, a premium of $1.40/b to August swaps as the market steepens its backwardated structure.

The Aug-Sep timespread now stands at $1.25/b, compared with just $0.75/b a week earlier. and the Q4 crack rose another $0.20 to $7.18/b FOB Singapore.

While part of that can be explained in a more backwardated crude market, sources say demand is now much stronger in the region despite tighter curbs on movements in Indonesia as Asia becomes a tale of two halves.

In Singapore, India and China infections are falling and restrictions are being softened and, while refinery utilization rates in China are steady, they are starting to pick up sharply in India as it recovers from its second wave.

However, in southeast Asia – particularly Malaysia and Indonesia – Covid-19 cases are rising, with the latter posting a record 22,000 cases day.

Overall though, gasoline margins are stronger globally.

There was strong buying interest in the RBOB crack on Thursday and Friday, market sources said, ahead of estimates that 43.6 million Americans were set to take to their cars over the weekend to celebrate Independence Day.

That underpinned a near $0.80/b rise in the RBOB crack spread for balance of July on Friday, with this morning seeing a further $0.55/b piled on, leaving the Brent/Rbob crack at $21.90/b – the highest crack for July in almost two weeks.

That widened the RBOB-EBOB to a one-week high.

The Eurobob barge paper crack strengthened to $11.50/b for July, up $0.30/b since Friday afternoon.