SINGAPORE: Asian refiners’ light distillates margins fell on Wednesday, weighed by Brent crude futures which hit their highest level since April 2019.

Naphtha crack fell to its lowest since mid-May and refiners’ profits for gasoline production slipped under $5 a barrel to a week’s low.

Still, naphtha is supported by demand from new crackers with the prompt monthly spread between the first half of August and the first half of September widening by 50 cents on Wednesday.

South Korea’s LG Chem issued for a second straight day on Wednesday tenders seeking naphtha for delivery in the second half of July and the first half of August, traders said. It was not immediately clear how many cargoes it purchased on Tuesday.

Rising gasoline inventories are weighing on the motor fuel, although India’s demand started to recover in June.

Gasoline inventories at the Fujairah Oil Industry Zone jumped for the week ended June 14 to 7.1 million barrels, the highest since March, according to industry information service S&P Global Platts. Japan’s gasoline stocks also rose in the week to June 12, data from the Petroleum Association of Japan (PAJ) showed.

The United States will release weekly oil inventories data later on Wednesday.

US crude oil and gasoline stockpiles were seen lower last week, while distillate inventories were expected to edge up, an extended Reuters poll showed on Tuesday.

Asian refiners are paying the highest premiums for Middle East and Russian crude oil in about a year, due to firm demand and more costly imports from the West, industry sources said.

China’s refinery throughput rose 4.4% in May from the same month a year ago to a record high, as margins improved on the back of easing supplies of blending stocks after Beijing announced new taxes.

Domestic fuel sales by Indian state refiners recovered in the first half of June due to the easing of coronavirus lockdowns across the country but was still lower compared with last year, preliminary data showed on Wednesday.

Oil prices are set to remain on a bullish course this year given the strong recovery in global demand following the COVID-19 pandemic-induced slump, the head of the Petroleum Association of Japan (PAJ) said on Wednesday.—Reuters