The Asian gasoline market structure flipped into contango — where later deliveries are priced at a premium to prompt arrivals — on 1 October because of an influx of cargoes from Saudi Arabia and China.
The balance October and November spread was assessed around $0.05-0.10/bl in contango. The last time the market structure was in contango was on 20 June when the spread fell to -$0.05/bl. The gasoline crack spread, or the Argus Singapore 92R gasoline spot assessments against Ice Brent, also reflected the weakness as it fell to $3.05/bl yesterday, the lowest since 20 October 2023 when the crack spread was at $3.01/bl.
The reason for the drop could be because of an influx in gasoline cargoes from Saudi Arabia, market participants said. There are a number of gasoline cargoes loading from Jizan, Saudi Arabia in September and are making their way towards Singapore, gasoline traders said. This could be related to the fall in spreads, said a Dubai-based gasoline trader.
About 113,000t (955,000 bl) of gasoline could be loading from the Jizan refinery around 9-13 September and is expected to arrive in end-September, according to global trade analytics platform, Kpler. This marks a significant increase from August's volumes of just 12,000t and is the highest since February, Kpler data show. This increase was also reflected in data from oil analytics firm Vortexa, which showed about 85,000t expected to ply the route in September as compared to below 10,000t in August.
The Jizan refinery has been exporting gasoline cargoes but mainly to the US. The US accounted for 61pc and 28pc of total export volumes in July and August respectively, according to Kpler.
An anticipated surge in Chinese gasoline exports in October also placed a cap on crack spreads. Exports are expected to increase in October because of improved export economics and the rapid development of new energy vehicles (NEVs) which reduces domestic demand and margins for gasoline. Chinese companies plan to export 190,000 b/d of gasoline in October, a rise of 60,000 b/d or 44pc from September, although the volume is 20,000 b/d or 11pc lower from a year earlier.
The release of Chinese export quota also eased concerns of a tight market in the fourth quarter. China exported around 26.17mn t of clean products from January to August 2024, GTT customs data show. An Argus survey suggests that China could also be exporting an estimated 5.29mn t from September to October 2024, bringing the total export volume to around 31.46mn t, which means about 9.54mn t quota left will remain for November to December 2024. Based on the January-September clean product export split, there should be more than 1mn t/months of quota for gasoline exports during November to December. In comparison, China exported an average of 750,000t of gasoline each month from January to October 2024.
