Gasoline: Supply expected to decline

The differential for MR-size cargoes of 92RON gasoline on FOB North East basis was unchanged on week. Supply was expected to decline. In South Korea, S-Oil Co, Hyundai Oilbank, and GS Caltex were said to skip any spot sales for cargoes loading in October. While domestic gasoline prices were softening on the back of lower crude oil prices in the international market and the government was scheduled to lift the tax cut policy on refined products, domestic demand was increasing. On the other hand, refiners were curtailing their productions of gasoline due to poor refining margins. SK Energy and GS Caltex were reportedly considering to lower the operations of the residue fluid catalytic cracker at their refinery. In China, the government announced the export quotas of oil products this year, and oil companies in the country would start full-fledged talks on cargoes loading in October from next week. However, a week-long holiday would start from the beginning of October and gasoline refining margins stood weak, refiners could curtail spot sales for cargoes loading in the month.

Naphtha: Fundamentals expected to tighten

The early half November open-spec naphtha prices on a CFR Japan basis was flat on week. Supply was expected to become tight because refiners would cut the operation rates of their refineries and refining volumes might decrease. According to a market participant, production volumes of naphtha seemed to decrease in South Korea. Supply/demand fundamentals were expected to become tight going forward. In 2025, turnaround of naphtha crackers was scheduled to be fewer than in 2024 and a decline in consumption volumes of naphtha was expected to be comparatively small. New naphtha crackers were planned to start operations in December onward this year such as in China. On the supply side, cargoes from Nigeria were heard to be decreasing.

Middle distillates: Jet fuel, selling interest by Chinese firms possibly to strengthen

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis was stable on week. However, it was viewed that selling pressures from China for cargoes loading in October could strengthen going forward. The Chinese government notified the third export quotas of oil products this year to oil companies in the country. Notified were 8.00 mil mt of oil products; almost at around the same volumes as the previous expectations in the market. However, in the view of the profitability, each company in the country was reportedly focusing on sales of jet fuel rather than gasoline or gasoil.

Spain's major oil firm Cepsa, Iberia, Vueling, and so on announced a report that would aim to realize decarbonization in the country by 2050. In order to attain the goal, it says it would be necessary to build more than 30 plants to produce sustainable aviation fuel in the country. Final goals of the group are to reduce 14.00mil mt of CO2 per year by 2050 in Spain.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia went up. Sales volumes were few from China and a sense of loose supply/demand fundamentals was retreating. In addition, freight rates were declining and it pushed up the prices on an FOB basis.

Fuel oil: Decreased supply shores up LSFO prices

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis went up on week. The market was pushed up by waned selling pressures in Asia. A sense of oversupply was receding in Singapore and other areas in Asia. On the other hand, Asia gasoline refining margins were recently drifting on a soft tone, whereas low sulfur fuel oil (LSFO) margins held firm. A market player expected LSFO supply to grow moving forward since a few oil firms considered raising LSFO yield ratio under the circumstances.