SINGAPORE—Asia's light ends market was weaker early Dec. 7, on the lower Brent crude complex. Gasoline was also dampened by concerns over COVID-19 movement curbs in California,
while LPG in Asia is balanced between ample supply expected from the US and the Middle East as well as healthy North Asian demand.Naphtha trading cycle moves into H2 January delivery and January East-West spread widens.
February ICE Brent crude futures shed 13 cents/b from the Dec. 4 Asia close to $49.04/b at 0341 GMT Dec. 7.
GASOLINE** January FOB Singapore 92 RON gasoline swap was lower early Dec. 7 at around $51/b, down 1.45% from the previous trading session, on slightly softer crude.
** Asian gasoline weakness also came amid a pullback in the US RBOB/Brent crack spread, as large portions of California went under new movement restrictions late Dec. 6. The US also reported record 237,372 cases of COVID-19 infections on Dec. 4, with expectations of further increases due to increased travel during the Thanksgiving holiday, local media reported. The US RBOB/Brent crack at 0230 GMT Dec 7 stood at $3.94/b, down 6.89% from the previous session.
** In Asia, pockets of demand emerged to buoy traders' sentiment, signaling healthier appetite for the motor fuel in 2021. Indonesia's Pertamina, the region's largest gasoline buyer, sought 500,000 barrels of spot 88 RON gasoline for Jan. 1-3 delivery to Tuban in a tender that closes Dec 8.
** Vietnam's Petrolimex will conclude a tender this week, for around 60,000 mt of either 90 RON or 92 RON gasoline and 60,000 mt of 95 RON gasoline for January delivery.
Results of Petrolimex's tender is due from Dec. 9, tender documents showed.
NAPHTHA**Physical CFR Japan naphtha benchmark stood at $425.125/mt early Dec. 7, down $2.75/mt from the Dec. 4 Asian close, as crude futures retreated.
**Asian naphtha firmed as the trading cycle moved into H2 January delivery and boosted the key front month January East-West naphtha spread by 32.76% versus Nov. 30 to $19.25/mt at the Dec. 4 Asian close. This level was last seen on Nov. 24, Platts data showed.
** However, in line with weaker economic sentiment due to coronavirus-related lockdowns, brokers pegged the January East-West spread lower at $18.25/mt in mid-morning trade Dec. 7.
** Reflecting softer sentiment, front month January to February Mean of Platts Japan naphtha swap dipped back into contango of 50 cents/mt during Dec. 7 mid-morning trade, broker
indications showed, versus a backwardation of 25 cents/mt at the Dec. 4 Asian close, Platts data showed.
LPG** Front month January CP propane swap was notionally indicated Dec. 7 at $454/mt, versus $456.50/mt on Dec. 4. Butane CP swap was indicated $5/mt above propane, narrowing from
$10/mt when December Saudi term CPs were set, as ample mixed cargoes are expected from the Middle East, while Indian spot demand is in a lull. This keeps FOB Middle East
differentials at double digit discounts to January CPs.
** December-January CP propane swap backwardation indicated at $9.50/mt versus $8/mt the previous session, and January-February steady at $21/mt Dec 7.
** Abu Dhabi National Oil Co. expected to announce acceptances of January term nominations by end-week, in the backdrop of OPEC and allies
having agreed to raise output quotas by 500,000 b/d in January, instead of the 1.9 million b/d increase originally scheduled, and planning to adjust them monthly,
so as not to inundate market with new supplies amid a recovery from COVID-19 hit on demand.
** Asia also expecting ample US LPG arrivals in January.
**North Asian demand for winter heating and petrochemical feedstock holds firm, amidst Chinese spot and term purchases.
