The prompt inter-month timespread for the FOB Singapore 92 RON swaps rose to an eight-month high last week, reflecting firming demand amid a tightening physical spot market ahead of the Asian refinery turnaround season.
The May/June time spread was assessed at $1.45/barrel Friday, unchanged from Thursday. The prompt inter-month timespread was last higher July 31, when it was assessed at $2.20/b.
A steeper backwardation indicates supply tightness and firmer demand for prompt barrels versus the later month.
This strength was also reflected in the physical cash differential, which rose 10 cents/b from Thursday to 41 cents/b Friday, after dipping into negative territory Tuesday at minus 3 cents/b.
Cash differentials represent the price buyers are willing to pay for a gasoline cargo, expressed as a premium or discount to Platts' benchmark assessments published around the day it loads.
FIRMER DEMAND AHEAD OF RAMADAN
Trade sources said the strength could continue well into May, as Indonesia -- the region's single-largest gasoline buyer -- begins to build stocks ahead of an expected rise in consumption during Ramadan in July.
Indonesia's state-owned oil and gas company Pertamina has so far lined up 8.3 million-8.7 million barrels of 88 RON gasoline and 400,00-600,000 barrels of 92 RON high-octane mogas components for May lifting on a term basis.
Traders expect Pertamina to supplement these term purchases with additional spot barrels, bringing their total May imports to up to 10 million barrels -- around the same volume it imported the previous month.
Meanwhile, Vietnamese importers Vietnam National Petroleum Corp. and Saigon Petro were heard buying a combined 595,000 barrels of 92 RON and 95 RON gasoline for May loading, compared with a total of 255,000 barrels of the two grades of gasoline the previous month.
"Vietnam is buying more for May," a Singapore-based trader said. "Both [May and June] are quite supported."
REFINERY MAINTENANCE TIGHTENS SUPPLY
The firm regional demand also translated into dwindling regional stockpiles of the light distillate.
Singapore's light distillates inventory fell for a fifth straight week to 11.439 million barrels as of April 2, down from 14.254 million barrels in the week ended February 26. The stocks are expected to fall further in May, sources said.
Exacerbating the supply concerns, at least 2.13 million b/d of crude distillation capacity is expected to shut in Asia in the second quarter for scheduled maintenance, according to data compiled by Platts from company statements and industry sources.
The closures represent 6.2% of the region's total refining capacity of 34.19 million b/d, Platts data showed.
