SINGAPORE: Asian gasoline profit margins have recently surged to overtake diesel and jet fuel margins as upcoming refinery maintenance in Indonesia and Vietnam will cut supply in the region.
Gasoline's premium to benchmark Dubai crude oil averaged $11.22 a barrel in May, outpacing the May average premiums for jet fuel at $10.50 and gasoil at $10.08, according to Reuters calculations using data on Thomson Reuters Eikon.
The strength in gasoline should continue at least until the middle of the third quarter, said oil analyst Nevyn Nah of consultancy Energy Aspects.
This is due to the refinery maintenance in Indonesia and Vietnam, Asia's two largest gasoline importers, as well as the prolonged shutdown of a gasoline unit in Ruwais refinery in United Arab Emirates (UAE) after a fire in January.
As a result of Ruwais shutdown, Abu Dhabi National Oil Co (ADNOC) had to seek more than 1.5 million tonnes of gasoline for March to December delivery to plug the supply gap.
"Gasoline is the strongest product now in Asia in terms of crack and timespreads. After lacklustre Indonesian buying in second-quarter, they are back for June spot barrels," said oil analyst Nevyn Nah of consulting firm Energy Aspects.
Indonesia's state-owned Pertamina is seeking 280,000 barrels of 88-octane and 98-octane grade gasoline for June loading from Singapore or Malaysia.
This came shortly after it had concluded a term deal for up to 6.25 million barrels of 88-octane gasoline per month for July to December delivery.
Gasoline may rise and fall relative to its oil product peers but it should perform well overall for refiners for the next few years.
"We expect Asian demand (gasoline) growth to continue with higher grades of motorisation, in particular in key countries such as China and India, while refineries will struggle to cope with the demand growth," said Cuneyt Kazokoglu, Head of Oil Demand at consulting firm FGE.
"Until 2022, we expect total Asian gasoline consumption to rise by 1.2 million barrels per day (bpd) while refinery production will grow by about 700,000 bpd only."
"By 2025, Asia will be net short of 1 million bpd (of gasoline)," he added.