Asian gasoline cracks slump, flip to contango on covid, stock data

London, (Quantum Commodity Intelligence) – Gasoline cracks in Asia fell by an eyewatering $1.40/b in trade on Friday on a combination of news that included bearish US and Singapore stock data, more restrictions across the region to combat the spread of covid and the return of the Colonial pipeline in the US.

Cracks for 92 RON June versus August cash Brent fell to $4.83/b FOB Singapore, down a sharp $1.39/b compared with Wednesday's levels.

Spot cracks versus July cash Brent now stand at their lowest level since 9 March at $4.45/b.

But, perhaps more notably, the June-July curve for cracks has flipped into contango with July cracks at an $0.18/b premium to June versus a $0.04 discount on Wednesday - a dynamic that reflects the nearby weakness of the market.

News that coronavirus cases are rising sharply across the region were behind the big move, with the Red Cross claiming that infections were near 6 million over the past two weeks, more than the rest of the world combined.

Seven out of 10 countries showing the fastest rates of infections week-on-week are now in Asia, and on Friday both Singaporean and Japanese lawmakers tightened restrictions to prevent infections.

Most significant is Japan where the government has extended the state of emergency to three more prefectures and put an additional 10 million people under restrictions.

An estimated 70% of the population in the world's third-biggest economy is under some form of measure – a dynamic that has sent jitters around the region.

Added to that bearish news, was Singapore and US stocks.

Thursday was a national holiday in Singapore and Friday's trading session was the first chance for buyers and sellers to judge the result of Wednesday's news that US stocks showed another surprising build in gasoline – up 400,000 barrels versus expectations of a 400,000-barrel draw.

And on Friday, Enterprise Singapore reported that light ends inventories rose to 12.38 million barrels.

Further out, the Q3 crack versus the relevant cash Brent contract has dipped $0.79/b to $5.06.