Asian gasoline refining margins near three-week low on Delta constraints

Quantum Commodity Intelligence – Asian gasoline refining margins were at a near three-week low on Wednesday amid more travel restrictions in the region, including in Australia – where half the population is in lockdown.

By 1630 Singapore time, 92 RON cracks versus cash Brent fell to $7.68/b on Wednesday, a fall of $0.39/b on Monday's close – when the market was last assessed.

The spot-front month backwardation in the market was just $0.30/b, down from $0.65/b on Monday and $0.80/b on Friday.

The fall now means that spot cracks are lower than front-month cracks for the first time this month in a sign of spot weakness in the road transport fuel.

Lower cracks come as the state of South Australia joined Victoria and large parts of New South Wales in locking down its population - amid a vaccination rate that is below 15%.

While Australia is a relatively small importer of gasoline – at just 150,000 bpd in May and 112,000 bpd in June – there are broader concerns that the outbreak of the Delta variant across southeast Asia could trigger more travel curbs.

State-owned Indonesian oil company Pertamina is expected to import 10% less gasoline in August than July, market sources said, due to the country approaching peak infections.

Thailand's prime minister said this week that the country will expand its Covid restrictions to curfews and stay-at-home orders, Vietnam closed non-essential services and told its citizens not to go outside and the Philippines announced new local restrictions. 

Meanwhile, Japan saw stocks of gasoline increase 1.13 million barrels over the week ending July 17 to 13.9 million barrels.

While lower Chinese exports of gasoline in June has meant cracks have been relatively buoyant so far this month, the 92 RON crack is now at the lowest since the first day of July.

Several deals were heard in the Platts window with bids sluggish versus front-month swaps.