Cracks for Asian oil products fall despite higher Japanese and Indian demand

London, (Quantum Commodity Intelligence) - Spot refining margins for most key products in Asia fell by 1630 Singapore time, failing to keep pace with another surge in Brent. 

Spot margins for marine fuel 0.5%, diesel, jet kero, gasoline and naphtha all fell on the day as front month Brent (August) futures rallied to multi-year highs, widening backwardation in the nearby curve.

The slump in cracks comes despite demand in Asia returning to more normal levels with indications from both Japan and India that fuel demand is on the rise.

On Wednesday, Indian refiners released data that showed demand was up 12-13% in the first two weeks of June versus the same period in May, while the chairman of the Petroleum Association of Japan said that refinery rates in the world's fourth biggest oil consumer are on the rise.

Gasoline spot cracks hit a one-week low of $4.86/b FOB Singapore versus $5.39/b a day earlier, a fall of $0.53/b, while front month cracks against September Brent were $5.46/b, down $0.32/b.

Gasoline cracks could be attributed to rising stocks in Japan and Fujairah, but the bearish picture was similar in other key products and gasoline cracks remain 20% below where they were for the average of May, according to Quantum data.

Jet cracks were also at a one-week low, down $0.31/b at $2.86/b FOB Singapore on the day with front month cracks down $0.22/b at $3.86/b.

Diesel 10ppm cracks fared better, they were down $0.21/b on the day to $5.76/b FOB Singapore versus a rise of $0.05/b for front month paper cracks to $4.08/b.

Naphtha cracks basis CIF Japan are at $95/mt, the lowest since mid-May.