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Market Overview
Naphtha
Sing 92 has got a huge uplift with diesel cracks rising. The two spreads cannot diverge too far away as the refinery has to grapple between making more diesel vs gasoline.
Naphtha for petchem on the other hand has been hit by some demand destruction from poor petchem margins and some switching from LPG and ethane, with more medium term switching on the horizon.
The Sing 92/MOPJ blowout is likely to remain at these high levels for the upcoming month, especially with reduced mogas exports from China.
MOGAS
Nov Sing 95/92 spread is at 5.60$/bbl following a steady rise since early July.
The Sing 95 RON blend costs minus the Sing 92 RON blend costs are also rising over the same period of time, which shows the paper position is fundamentally supported.
This is linked to the strengthening Sing 92/MOPJ spread. Essentially more naphtha can be blended into Sing 92 than into Sing 95 RON grade.
With the latest dip in the spread, we remain long Nov Sing 95/92 at a target of 6$/bbl.
