SINGAPORE: Asia's gasoline crack recovered from a five-session low to hit a two-day high of $2.80 a barrel on Thursday, as falling gasoline inventories and the hurricane season in the United States provided support.
Singapore's onshore light distillates inventories, which comprise mostly gasoline and blending components for petrol, fell 8% or close to 1.2 million barrels to reach a six-month low of 13.6 million barrels in the week ended Aug. 26, data from Enterprise Singapore showed.
This mirrored the drop in gasoline inventories in the United States where stocks fell by 4.6 million barrels, compared with analysts' expectations for a 1.5 million barrel-drop.
Meanwhile, Hurricane Laura made landfall early on Thursday in southwestern Louisiana as one of the most powerful storms to hit the state, with forecasters warning it could push a massive wall of water 40 miles inland from the sea.
Asia's naphtha crack fell to a four-session low of $72 a tonne. Taiwan's Formosa Petrochemical bought around 100,000 tonnes of open-specification naphtha for first-half October arrival at Mailiao at a discount of about $1 to Japan quotes on a cost-and-freight (C&F) basis, industry sources said.
This was cheaper compared to flat Formosa had paid on Aug. 12 for about 50,000 tonnes scheduled for second-half September arrival. South Korea's KPIC has likely sealed its 2021 naphtha deal with sellers at a premium of about $3.75 a tonne to Japan quotes on a C&F basis but this could not be directly confirmed as buyers typically do not comment on deals.
This followed several other term contracts sealed this month, including by YNCC and LG Chem which industry sources said their 2021 premiums could be anywhere from $6 to $7 while Formosa's October 2020 to September 2021 premiums were seen be around $4 to $5 a tonne to Japan quotes on a C&F basis. But again all these could not be independently confirmed.
The 2021 premiums however were seemingly higher compared to most years before 2013/2014. Malaysia-based Titan and South Korea's Hanwha Total are also seeking cargoes for 2021 delivery.