Asia light ends: Key market indicators for April 18-22

Asia's light ends markets are supported during the week of April 18-22 by stronger crude futures, with gasoline also boosted by the loosening of COVID-19 restrictions and naphtha demand getting some lift from improving ethylene-naphtha margins.

LPG is awaiting Saudi Aramco's announcement of acceptances of May-loading term nominations over the next two days for more signals of healthy Middle Eastern supply, countering the strength expected from the crude-driven rally.

Gasoline

** Asia's gasoline complex is expected to strengthen in the week starting April 18, as regional economies loosen COVID-19 restrictions, market sources said.

** Higher demand is expected from Myanmar, as restrictions on public gatherings are lifted from April 17 amid the country's New Year festivities, local media reported.

** Brokers pegged front-month FOB Singapore 92 RON gasoline crack against Brent swap at $16.15-$16.20/b at 0300 GMT April 18, up from $15.37/b at the Asian close April 14, S&P Global Commodity Insights data showed.

** A tighter US market also boosted the sentiment in Asia, as US RBOB-Brent crack rose 5.64% week on week from the April 11 Asian close to $29.73/b in mid-morning trade April 18. US gasoline stocks fell 3.648 million barrels to 233.139 million barrels in the week ended April 13, Energy Information Administration data showed. US product supplied, or implied demand, of finished motor gasoline rose 174,000 barrels on the week to 8.736 million barrels in the week ended April 13, the data showed

Naphtha

** The physical C+F Japan naphtha marker rose $40.75/mt from the previous Asian session to $983.75/mt in mid-morning trade April 18 on higher crude.

** Buying activity in the Asian naphtha market for H1 June delivery into North Asia is expected to pick up the week starting April 18. Some buying had begun for H1 June delivery during the April 11 week, and sources said the trading period was expected to see improved demand compared to H2 May-delivery on healthier ethylene-naphtha margins.

** Naphtha blendstock demand was expected to firm as the reforming spread -- the difference between Singapore 92 RON gasoline and Singapore naphtha derivative – widened by 96 cents/b on the week to $22.26/b at the Asian close April 14, and was $1.60/b above the month-to-date average of $20.66/b, S&P Global data showed.

** But as the market remained volatile due to uncertainties over the Russia-Ukraine war, sentiment was largely unchanged in the paper market in early April 18 trade, with brokers pegging front-month May-June Mean of Platts Japan naphtha swap time spread down 25 cents/mt from the previous close at $11.50/mt, S&P Global data showed.

LPG

** Front-month May propane contract price swap was indicated at $905/mt April 18, up from $873/mt April 14 and $35/mt below April term CPs driven by stronger crude futures.

** The Saudi CP May-June backwardation was indicated at $38/mt April 18, widening from $37/mt April 14. The premium of May CP propane to butane narrowed to $5/mt April 18, from $8/mt the previous trading session, as Middle East butane supply is expected to remain healthy while demand for butane or mixed cargoes is yet to recover, traders said.

** The narrowing propane-butane spread comes ahead of Saudi Aramco's announcement of acceptances for May term nominations by April 20, which could meet lifters' nominations, in the wake of similar announcements by Qatar Petroleum and Abu Dhabi National Oil Co.

** LPG remains an economical alternate cracker feedstock, with May FEI propane to Mean of Platts Japan naphtha assessment indicated April 18 at a discount of $97.14/mt versus $90.75/mt on April 14.