The Singapore cracking margin against Dubai crude rose to $7.46/b Monday, its widest in 32 months, supported by firmer light distillate cracks and weaker crude, Platts data showed.
It has widened from $5/b on November 1, with much of the recovery led by naphtha.
The Singapore cracking margin against Dubai crude was last wider February 25, 2013, at $7.49/b.
The front-month naphtha/Dubai crack swap has risen sharply to an average of $4.44/b so far in November, up nearly fourfold from an average of $1.28/b in October.
But the spread narrowed 28 cents/b from Friday to $5.91/b Monday.
The physical naphtha crack also saw strength this month.
The crack between front-month ICE Brent crude and CFR Japan naphtha cargo assessment rose $1.75/mt from Friday to $110.78/mt Monday, the highest in seven months.
The crack was last higher March 31 at $110.95/mt.
Factors supporting the Asian naphtha market include healthy refining margins and delays for December West-to-East arbitrage flows.
HEALTHY GASOLINE DEMAND
The Northeast Asian naphtha cracking margin widened $6.50/mt day on day to $270.125/mt Monday. It was last wider August 6 at $272.25/mt.
The gasoline crack -- the spread between front-month 92 RON gasoline swaps and front-month Dubai crude swaps -- also supported the higher refining margin.
The spread has averaged $12.49/b since the start of November, up 17% percent from the same period last month when it stood at $10.66/b. At the end of October, the gasoline/Dubai crack swap averaged $11/b.
Healthy regional demand has kept gasoline cracks steady. But this is expected this to dissipate amid softer gasoline import volumes from Indonesia -- the region's largest gasoline importer -- due to increased domestic production.
State-owned Pertamina will import around 5.8 million barrels of 88 RON gasoline, down from around 7.2 million barrels in November.
The country's domestic production of gasoline has risen since the startup of the 62,000 b/d residue catalytic cracker at the 348,000 b/d Cilacap refinery and the restart of Trans-Pacific Petrochemical Indotama's 100,000 b/d condensate splitter in October, which can produce 30,000 b/d and 60,000 b/d of gasoline, respectively, when run at full rates.
The Asian sour crude market saw sharp gains in light distillate crack values this month providing strong support for Qatari condensates and naphtha-rich Abu Dhabi grades.
Most of the lighter crude grades in the Middle East sustained a rally this week with spot differentials for Qatari condensates hovering at multi-year highs, while Abu Dhabi's Murban and Das Blend cargoes fetched lofty premiums.
Platts assessed Abu Dhabi's flagship Murban crude at a premium of 45 cents/b to the grade's official selling price Monday, and light sour Das Blend crude was also assessed at a premium of 45 cents/b to its OSP.
DEMAND FROM PETROCHEMICAL SECTOR
Qatar's deodorized field condensate hit a more than two-year high at a premium of $4.05/b to Platts front-month Dubai crude assessments Monday, the highest since posting a $4.20/b premium on October 11, 2013. Qatar's low sulfur condensate, or LSC, was last assessed at a premium of $3.25/b to front-month Dubai, the highest since posting a $3.60/b premium on October 11, 2013.
Participants were not surprised by higher prices for naphtha-rich grades, given support from healthy light distillate crack margins and strong condensate and naphtha feedstock requirements from Northeast Asian petrochemical makers.
"[Refining] margins are good ... gasoline demand normally picks up during the Lunar New Year holidays," said a trader with a South Korean refiner.
Regional sour crude traders said Brent's rising premium against Dubai crude could have kept North Asian end-users focused on Dubai-linked grades, limiting any arbitrage flows toward Asia.
"Middle East grades are in demand thanks to widening [Brent-Dubai] EFS [Exchange of Futures for Swaps] ... crack values are so strong too, especially naphtha and gasoline," the South Asian trader said.
Front-month Brent/Dubai EFS, a key indicator of ICE Brent's premium to benchmark cash Dubai prices, has averaged $2.28/b to date in November, up from $1.88/b in October and $1.47/b in September.
All yields and netbacks are produced using Platts product assessments and Turner & Mason's TMMS refinery modeling platform, configured to represent actual processing capabilities in specific regional centers, based on a survey of operating refineries to be updated annually.
