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Product Markets and Refinery Operations

OPEC Monthly Oil Market Report – September 2017

65

Asian market

The Asian market continued its upward trend in August, and was also affected by disruption of supply from

the USGC, resulting in growth in all product crack spreads, with the exception of fuel oil, which declined

sharply.

Graph 6 - 5: Singapore crack spread vs. Oman

The Singapore

naphtha

crack inched up compared with July levels to gain around $1.92/b over the month,

moving the crack spread into positive territory for the first time since February 2017. The crack spread

against Oman crude in Singapore averaged $0.21/b in August. Product fundamentals were solid in August,

with strong gasoline prices supporting reforming spreads and healthy petrochemical demand in the region.

Additionally, scheduled refinery maintenance will affect 0.3 mb/d from MRPL, India’s Mangalore refinery,

which is a key naphtha exporting refinery in the region. Formosa Petrochemical’s planned shutdown of its

2 million tons yearly (mty) is projected to last until the end of September, pressuring the crack spread going

forward.

The Asian

gasoline 95 RON

crack spread against Oman crude in Singapore averaged $17.1/b in August, up

by a healthy $3.0/b compared with the previous month’s level. The

gasoline

market continued to strengthen

during August, supported by healthy overall demand in the region and exacerbated by refinery outages on

the USGC, which opened up arbitrage opportunities to the US. Additionally, fire at Petrochina’s 0.4 mb/d

Dalian refinery further tightened supply in the region, thus supporting the crack spread.

At the

middle of the barrel

, the

gasoil 50ppm

crack spread witnessed some gains, adding around $0.1/b

compared with July to reach $13.9/b in August. In the first half of August, the product exhibited a downward

trend on the back of a heavy monsoon season in India, halting diesel requirements and unworkable arbitrage

to Europe. However, towards the end of the month, the gasoil crack spread received support from supply

outages on the US Gulf Coast as product prices increased. The

jet/kero

crack spread also experienced

upward momentum in tandem with gasoil, increasing by $0.6/b compared with July to reach $12.74/b in

August, supported by high global demand and outages from the US Gulf Coast.

At the

bottom of the barrel

, the Asian

fuel oil 180 cst

crack spread in Singapore against Oman averaged

about minus $3.2/b in August, shedding around $1.7/b of its previous month’s value. The fuel oil

market

weakened as stocks in Singapore rose on the back of rising volumes from the US prior to Hurricane Harvey

and power sector demand from South Korea and Japan waned.

-20

-10

0

10

20

-20

-10

0

10

20

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

US$/b

US$/b

Premium gasoline

Jet/Kerosene

Gasoil

Fuel oil

Sources: Argus Media and OPEC Secretariat.