Mideast gasoline appetite draws in fresh shipments from Europe, Asia

Singapore — The bullish East of Suez gasoline market was drawing fresh gasoline barrels from Europe and Asia following supply woes at a time of robust demand, market sources said Friday.

Last week, up to six Long Range 1 tankers were heard chartered to move European gasoline to the Persian Gulf, and an additional LR1 tanker from Singapore was slated to lift gasoline to PG as well. 

Reliance Tuesday announced a force majeure on gasoline cargoes from its Jamnagar refinery, pushing East of Suez gasoline prices to near one-year highs.

Market participants said demand was strong in the PG region and Indonesia due to the upcoming Eid holiday, and key Asian importer Pertamina had plans to import 11 million-12 million barrels of gasoline in September -- the highest of 2018, as monthly imports had not ranged above the 10 million barrel level after falling from a peak of 12 million barrels in December 2017, Platts data showed.

Pertamina was expected to receive maximum term barrels from its suppliers, including Aramco, as not only was it hosting the Asian Games, which started August 18, but also had to cover shortfalls from domestic refineries.

ASIAN MARKET SENTIMENT BUOYED

Firm price ideas were heard for the recent Pakistan State Oil tender: "Premiums are pretty much double if you can find any cargo at all, most people are not offering anything, Iraq and Saudi Arabia are buying; and for the PSO tender today the general number was [a premium of $7/b to Mean of Platts Arab Gulf 92 RON gasoline assessments], when their last tender was awarded at a plus-$2.80 level," a trader said.

Offers for PSO's H2 September delivery tender were a premium of $4.18-$6.43/b to MOPS 92 RON gasoline assessments for 92 RON gasoline, sources said.

"The gasoline East/West September spread has shrunk to minus $2.2, when it used to be minus $3.5, which means Asian gasoline prices are stronger compared to EBOB, so it makes sense for PG to not take cargoes from Asia," said a trader with a North Asian refiner.

However, some traders said arbitrage opportunities were limited.

"People are thinking of taking European gasoline but [if market is tight there from] Norway's refinery issue, maybe only 1 odd cargo would come in, not in bulk because Europe's gasoline market also went berserk [Wednesday]," said a Singapore-based trader.

Fixtures details were available for five LR1 charters. Also, market sources said a sixth LR1 was also chartered and some European gasoline cargoes on the water were diverted to Asia.

Also, the dry resupply of gasoline from Europe to PG in prior weeks had already drawn barrels from Asia. Up to 450,000 mt of August-loading gasoline was slated to ship from Taiwan and Singapore to PG, according to trade sources and shipping fixtures.

The most recent was Trafigura chartered an LR1 tanker, the Starling, for a Singapore to Fujairah voyage, loading August 24, said shipping sources.

"Generally about 200,000-300,000 mt comes in every month from the Far East but with Singapore and AG tight, [there will be] no spares to send," a Singapore-based trader said.