By ERIC YEP
Asia's light distillates market is weighed down by excess supply, with naphtha differentials under pressure although demand fundamentals remain largely stable.
Gasoline demand, however, tapered following a seasonal increase during the festival month of Ramadan.
"Naphtha demand is quite steady but the bearish factor is still voluminous arbitrage inflow from Europe," a Malaysian-trader said.
Singapore's stockpiles of light distillates, including naphtha and gasoline, rose by 15% to 9.3 million bbl in the week ended Aug. 14, data showed. The inventory levels are at their highest in more than a year due to increasing supply, and will pressure light distillate premiums, traders said.
Middle distillate premiums in Asia also declined during the week, mainly for gasoil as demand levels appeared to moderate in key consumer markets like China and India.
However, differentials will find temporary support in lower onshore stockpiles of middle distillates in Singapore that fell to their lowest level in around five years, Singapore-based traders said.
Gasoil and kerosene stocks in the city state fell by 12% to 6.3 million bbl in the week ended Aug. 14, and there are enquiries to send jet fuel to the west, shippers said.
Singapore's residual fuel inventories rose by 3.5%, to 21 million bbl, traders said.
New refinery projects continue to raise expectations of a fuel over-supply in the region.
JBC said Trans-Asia Refinery will build a 100,000-bpd refining complex in Pakistan to produce gasoil and fuel oil.
"However, even with this refinery being built, our outlook for Pakistan confirms that the country would remain a sizeable net-importer of gas oil and fuel oil, with our 2020 figures hinting at a combined requirement of still around 160,000 barrels a day for the two products," JBC added.
Dow Jones Newswires