Asia’s naphtha refining profit margin rose on Thursday as crude oil prices slipped, while first-half September and first-half October cargoes continued to trade below $700 per metric ton.

The crack gained about $2 at $71.85 per ton over Brent crude in a steady backwardation of $4.50 a ton.

On supply side, total exports from the Middle East were assessed at about 2.93 million tons in July, lower than the monthly average of about 4.3 million tons even as some Asian crackers came back from maintenance, data from LSEG Research showed.

Freight rates on the Arab Gulf (AG) to Singapore route were also on a downtrend this week due to abundant supplies amid weak cracker demand in Asia, traders and analysts said.
“The cost of the long range tanker voyage on the AG-Singapore route declined 15% over the week to $22.45 per ton,” LSEG Research said in a note.

In tenders, Taiwan’s Formosa was heard seeking September-delivery naphtha, while an Indonesian buyer also sought 22,000 tons of naphtha for the same month, market participants said.

INVENTORIES
Light distillate stocks rose by 1.224 million barrels to a seven-week high of 15.737 million barrels in the week to July 24, data from Enterprise Singapore showed.

U.S. gasoline stocks fell by 5.6 million barrels in the week ended July 19 to 227.42 million barrels, the U.S. Energy Information Administration said. That compared with analysts’ expectations in a Reuters poll for a 391,000 barrel decline.

NEWS
– Japan’s Honda Motor will close a factory in China and halt vehicle production at another plant, as it seeks to start producing more electric vehicles amid heavy competition from Chinese brands.

– Russia will compensate for exceeding crude oil production quotas set by OPEC+ partners and there is no friction over the issue, Russian Deputy Prime Minister Alexander Novak told reporters.

– Oil prices fell on mixed demand signals a day after large draws on U.S. inventories while consumption in China, the world’s largest crude importer, remains lacklustre. O/R
Source: Reuters (Reporting by Mohi Narayan; Editing by Varun H K)