Asian gasoline cracks plunged on Wednesday mid-morning after Saudi Arabia reassured that it would restore its oil output in the next two weeks.
Market participants indicated the 92 RON gasoline swap crack for October was pegged at $6.50/barrel to $6.60/barrel by 10.30 am Singapore time (0230 GMT), down from $7.24/barrel on Tuesday’s closing. The 92 RON gasoline cracks at FOB Singapore against front-month ICE Brent crude futures also narrowed to $9.10-$9.20/barrel from $9.47/barrel at the prior day’s close.
Despite the decline, Asian gasoline fundamentals remain firm. Market participants said Indonesia’s Pertamina bought about 10 million to 11 million barrels of 92 RON gasoline for October delivery. Pertamina also seeks to purchase 88 RON gasoline as much as 1 million barrels for early October shipments.
Saudi energy minister Prince Abdulaziz bin Salman said that the kingdom had restored half of the lost production capacity caused by the attacks on Abqaiq and Khurais facilities. Saudi aims at achieving 11 million bpd production by the end of September and restoring it fully to 12 million bpd two months later.
The statement helps to calm the market on fears of prolonged disruption. However, participants remain cautious and start weighing options of getting crude from alternative suppliers to mitigate possible disruption events in the future.
