The backwardation in the FOB Singapore 92 RON gasoline market firmed sharply Tuesday, September 23, as concerns that replacement barrels in Asia could be limited going forward perked up sentiment, traders said Wednesday.
The spread between FOB Singapore October and November 92 RON gasoline swaps widened 25 cents/barrel, or 27% day on day, to be assessed at $1.15/b Tuesday.
The spread was last assessed at the same level on August 29 this year, data showed.
In a backwardated market, the price for the distant delivery month is lower than the prompt delivery month and the firming of a backwardated curve could indicate rising demand and lower supply.
The September average for the front-month/second-month swap spread was at plus 77 cents/b Tuesday, while the average for August was plus 35 cents/b, data showed.
"As we head closer to October, there is a sense that [North Asia] supply may not be able to meet spot demand," a Singapore-based trader said Wednesday.
"The current refinery turnaround season ... has led to the tight market."
During Tuesday's Platts Market on Close assessment process there was active buying interest for the prompt swap spread seen.
PTT bought the October/November swap spread from Vitol at $1.10/b, after which JP Morgan bid for the same swap spread at $1.10/b which was left standing at the close.
"Replacement barrels from India have not been coming into Singapore [in recent weeks]," another trader said.
"And some cargoes have been drawn away from Asia into the Persian Gulf and East Africa," he added.
Amid this tight supply situation, incremental demand from the region's biggest importer Indonesia was seen, with state-owned Pertamina's trading arm Petral seeking an additional 800,000 barrels of 88 RON gasoline for October via private talks amid lower domestic production, Platts has reported.
According to trade sources, Pertamina has so far covered at least two 200,000-barrel cargoes of 88 RON for October.
There was additional demand coming from the Middle East, Indian subcontinent and East Africa as well.
The Abu Dhabi National Oil Company is seeking three 30,000-mt-parcels of 95 RON gasoline for delivery into Ruwais over November 5-7, November 13-15, and November 21-23. The tender closes Thursday and has four-day validity.
Elsewhere, India's Indian Oil Corp. is seeking up to 40,000 mt of 92 RON gasoline via tender for delivery in October, said sources.
Late Tuesday, Kenya's Oil Industry Pipeline Co-ordination Secretariat bought 12,200 mt of 93 RON gasoline for delivery over October 27-30 into Shimanzi Oil Terminal, Mombasa, Kenya.
The parcel was sold by Gapco at a premium of $33.12/mt to October Mean of Platts Mediterranean Premium Unleaded 10 ppm gasoline assessments, CFR, said trade sources.
Pakistan too is tipped to buy seven 50,000-mt cargoes of 87 RON gasoline to be loaded over October-December, up from six 50,000-mt cargoes it had bought earlier via tender for loading over August 21-October 10, trade sources said Wednesday.
The August 21-October 10 cargoes were heard to have been awarded at premiums of $55.44-59.97/mt to Mean of Platts Arab Gulf naphtha assessments, for loading from the Persian Gulf.
The sellers were heard to be Gunvor, Swiss Singapore Vitol and OTI.
