NEW DELHI: Asia’s naphtha crack eased on Tuesday as expectations of a contraction in monthly inflows into the region weighed on demand sentiment.
The crack fell to $133.70 a tonne from $137.23 in the previous session, while the prompt inter-month spread narrowed by 50 cents in backwardation. “Thinner-than-usual Western arbitrage inflows weighed on overall supplies this month, with volumes currently pegged at a five-month low of 2-2.1 million mt for September, contracting from both the previous month’s total and the year-to-date monthly average at 2.2 million mt,” Refinitiv Oil Research said in a weekly report. Middle Eastern arrivals also dipped, compounding the decline, although shipments from Asia’s largest supply region are expected to hold at above-average levels, the report added. Asia’s gasoline crack also fell as crude oil prices dropped after Saudi Arabia’s sharp cuts in crude contract prices for Asia sparked fears of slower demand. The crack fell to $7.05 a barrel from $7.68 in the last session. However, the downside remained limited as import demand outlook remained strong.
“While the situation in several countries, including Vietnam, remains fraught; Indonesia has seen (COVID-19) cases fall, alongside increases visible in our compound mobility indicator, as lockdowns have been unwound,” consultancy JBC Energy wrote in a research note. Import demand from Asia’s key buyer will likely pick up, providing further support to cracks at a time when seasonal pressure on the Atlantic Basin is imminent, the note further added.
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