Asia’s naphtha refining profit margin gained on Wednesday as prices of rival feedstock liquefied petroleum (LPG) gas rose, making its use less favorable for flexible crackers, analysts and traders said.

The crack jumped by $8.50 to $77.85 per metric ton over Brent crude and the backwardation between first-half August and first-half September naphtha prices widened to $11 a ton.

South Korean buyers were active in the market for August-delivery naphtha this week, market sources said. However, Taiwanese buyers were still heard seeking some propane for July and August. Crackers in Taiwan can switch up 10-15% of their feed to LPG from naphtha.

Meanwhile, Russian oil producer Lukoil has restarted a key piece of equipment for oil processing at its NORSI refinery, the country’s fourth-largest, following a drone attack in March, two industry sources told Reuters.

The sources said the CDU-6 crude distillation unit, halted on March 12, resumed processing on June 22.

INVENTORIES

Light distillate stocks at the Fujairah commercial hub rose by 165,000 barrels to 5.961 million barrels in the week to June 24, S&P Global Commodity Insights data showed.

NEWS

– Oil prices inched up on Wednesday nearing their highest level in almost two months, driven by forecasts for an eventual inventory drawdown during the third quarter peak summer demand season and geopolitical risks from the Middle East conflict.

– U.S. crude oil imports last month rose to nearly a two-year high as refiners scooped up heavy crudes from Canada and Latin America to process into fuels for summer driving season.
Source: Reuters (Reporting by Mohi Narayan; Editing by Sohini Goswami)