Asia Naphtha/Gasoline-Naphtha crack slips; gasoline demand seen to firm up

SINGAPORE: Asia's naphtha crack inched lower on Tuesday, but still lingered close to its strongest levels in three weeks, thanks to tighter supplies and firmer demand for petrochemicals.

The naphtha crack dipped to $107.15 per tonne from $108.88 per tonne on Monday. It has surged about 77% in the last two months.

Naphtha flows into Asia this month was provisionally estimated around 5.6 million tonnes, down from January's of 6.2-6.3 million tonnes, Refinitiv oil research assessments showed.

"The drop in overall supplies, combined with higher feedstock demand from the petrochemical sector, has provided steady support to Asian naphtha fundamentals, with all crackers in the region now back from turnarounds," said Krystal Chung, senior analyst at Refinitiv.

Asia's gasoline crack eased to $4.12 per barrel on Tuesday, down from Monday's $4.74 a barrel.

The gasoline crack has gained 16% in the past month, and market watchers expect demand for the transportation fuel to pick up pace as countries ease mobility restrictons further in coming days.

"Gasoline cracks in Asia remain significantly below their seasonal norms and, given that the underlying fundamentals are fairly bullish, we would expect a further normalisation in the crack spread over the coming quarters," said Emma Connors, senior oil and gas analyst at Fitch Solutions.