Singapore gasoline cracks under pressure in H2

Following some key developments, there are more downsides in the East of Suez market. For one, the capacity and complexity upgrades to the Balikpapan refinery have raised its CDU throughput, and the plant can now produce Euro 5-compliant gasoline. While Indonesia's imports hit a record weekly high of 540 kbd in June due to project delays, we expect the country's import requirements to decline as the upgraded 360 kbd facility ramps up. We expect a reversion to the mean, and that Southeast Asian balances will seasonally ease in Q3.  

Compounding this, reports indicate that China intends to export 46% more gasoline m/m at 980 kt this month. Meanwhile, the government is also reportedly considering a bumper 12 Mt clean oil product export quota award in September, which would bring the quota allocations to a record high of 45 Mt. It will not be easy to find an outlet for these cargoes, given the Dos Bocas startup and US West Coast stocks still 6% above typical averages. Northeast Asian refiners will also face renewed competition from the US Gulf Coast for Latin American buyers, as Panama Canal water levels have stabilized this year.

Gasoline 95r Singapore vs Dubai ($/bbl)

Source: PVM Data Services (Vienna), Argus Media (historical data), Kpler (forecasts)

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