The Asian gasoline market, which had seen refining margins drop to multi-year lows through November 2018 to January 2019, has steadily recovered since February with the Singapore 92 RON gasoline crack spread against front month April ICE Brent crude oil futures hitting a four-month high of plus $2.41/b at the 0830 GMT Asian close on Monday.
The crack was last higher on October 31, 2018, when it stood at plus $2.95/b.
The rally in gasoline came on the back of news of extensive refinery turnarounds in the region, which heightened expectations of supply tightness in the coming months.
Last week alone saw several announcements with PetroChina, in particular, announcing full turnarounds at two of its refineries -- the 200,000 b/d Wepec refinery and the 190,000 b/d Urumqi refinery -- over April 1-May 10 and April 21-June 19, respectively.
Among others, Japan's largest refiner JXTG Nippon Oil & Energy will also shut its CDU at the Osaka refinery in western Japan and its CDU at its Chiba refinery in Tokyo Bay from early and mid-March, respectively. Taiwan's Formosa will shut its No. 2 CDU at its Mailiao refinery for approximately one month, while ExxonMobil will shut several units of its Singapore refinery for several weeks soon.
"Several turnarounds in the region have been supportive of the market -- India and Indonesia have also been actively buying, which is also good news as well," one Singapore-based market participant said.
According to open spot tenders seen by S&P Global Platts, Indonesia's state-owned Pertamina has sought around 2.16 million barrels of 88 RON gasoline and 350,000 barrels of 92 RON gasoline for March, while India's BPCL and HPCL have sought a total of 100,000 mt of various grades of gasoline for the same month as well.
US RBOB cracks have also been supportive of Asian gasoline, market sources said. RBOB/Brent futures have also climbed to a multi-month high Monday, coming in at $7.60/b, Platts data showed. It was last assessed higher on August 31 at $12.32/b.
STRENGTH IN THE PAPER MARKET
The strength in the physical market has also impacted the derivatives market as the front-month April/May Singapore gasoline timespread had also jumped to a four-month high on Monday to 22 cents/b, the highest since October 31 when it was assessed at 27 cents/b, Platts data showed.
In that regard, the prompt April/May time spread flipped into a backwardated structure on Friday at 2 cents/b and has remained in positive territory since.
Bullish sentiment was also evident further down the curve with the Q2/Q3 quarterly spread jumping 16 cents/b to be assessed at 26 cents/b Monday, marking the highest level since September 28 when it was assessed at 83 cents/b.
Front-month April Singapore gasoline swaps against Brent swaps -- which measures the relative value of the product to crude oil -- also rose 70 cents/b to be assessed at $2.17/b Monday, Platts data showed.
