Light end summary: Gasoline slips on shift to lower winter-specs

22 Sep 2023

Quantum Commodity Intelligence – Gasoline fell back towards two-month lows this week as suppliers shift to lower-grade winter specs, balanced against tight supply through autumn on maintenance in both Europe and Asia, which has driven support for naphtha values this week.

Eurobob oxy gasoline cracks fell back to around $23/b by Thursday, within touching distance of two-month lows seen at the start of September, and down around $5/b from the end of last week.

The fall comes amid a slowdown in physical liquidity in the ARA barge market, with no trades seen at all on a few days this week, as the market prepares for the seasonal transition to lower-grade winter specs.

The final summer Eurobob barges will change hands alongside winter barges during 25-27 September, and assessments will fully reflect winter grades from 28 September. Most US of the US, except California and some of the warmer states, have already shifted to winter grades.

With blenders now able to switch naphtha for cheaper component butane, values are expected to stay under pressure. Sep/Oct spreads on the paper point to a sharp $50/mt difference between summer/winter barges. 

Structure remains tight across the curve, but flattened this week. Oct/Nov (M1-M2) timespreads eased around $5/mt, but still showed a $45/mt backwardation by Thursday's close.

Much of that is to do with autumn refinery maintenance. Two gasoline-producing FCC units were confirmed shut this week, at Equinor's 240,000 bpd Mongstad refinery and Repsol's 220,000 bpd Huelva plant.

That coincided with a sharp draw in ARA gasoline stocks, which fell for the second straight week by 6% to a five-week low 1.3 million mt.

US stocks also fell by more than expected, down 831k barrels or 0.4% to 219.5 million barrels as of 15 September, as per EIA data, as net exports hit a 3.5-yr high 633k bpd.

Transatlantic export demand remains a weak point, the RBOB-EBOB spread turning negative again this week with the arb firmly closed to the US. 

Russia ban

The ban on Russian gasoline exports announced this week in an attempt to cool rising prices at home will have a limited impact on European supply, at least directly.

The country exports only around 100,000 bpd of gasoline, and none of it into Europe since sanctions at the start of the year.

Russian gasoline has found its way to west Africa this year, displacing European flows in the spring. But much of that had slowed already through the summer as exporters were directed to keep more product in the country and refinery maintenance limited supply.

The ban has already gone some way to achieving its aims, wholesale gasoline A-92 grade gasoline down around 10% on Friday on Russia's SPIMEX exchange.

Russian exporters will have to start exporting diesel again after about a month, according to most estimates, if it wants to keep its refineries open – otherwise domestic prices are likely to soar again.

As for naphtha, Russian refiners could shift slates further towards light ends as diesel storage fills – and there is potential for increased naphtha supply as a result. 


Asian gasoline followed Europe, 92 RON Singapore M1 swaps down a similar $4.50/b over the week to close at Friday around $8.33/b over ICE Brent – its lowest since mid-July.

It comes despite signs of continued tight supply.

Outflows from India are on course to dip below 1 million mt for the first time in five months, according to Refnitiv tracking, with just under 800,000 mt accounted for so far, attributed to strong domestic demand.

Indian demand is expected to strengthen further around the Diwali festival season and keep exports subdued through October and into November.

Exports from Asia's other key producer, China, meanwhile are also unlikely to surpass the 1 million mt mark this month, with shipments provisionally assessed by Refnitiv at 600,000-650,000 mt to date.

Rumours of a fourth batch of product export quotas has been an additional bearish driver this week, as well as suggestions that a portion of the existing LSFO quota may be converted to clean products.


Despite lower demand for naphtha in the gasoline pool, values ticked higher this week in both Europe and Asia on tightening supply.

Naphtha CIF Japan M1 swaps firmed $1.40/b on the week to -$11.80/b versus ICE Crude by Friday's close, while October paper was $1.70/b higher in northwest Europe at -$12./71/b by Thursday.

That kept the east-west naphtha spread tight at $3.50/mt on balmo September paper and $6.50/mt on M1 October.

Structure also tightened, M1-M2 timespreads in both regions up more than $2/mt to around $4.50/mt backwardation – its widest since late August.

Reports of increased cracker runs have added support, although margins remain in deep negative territory, which has been balanced by lower lower availability of naphtha in commercial tanks.

Naphtha held in the ARA sank 9% this week to a five-month low 183kt, down nearly 60% on the same time last year.

In Singapore, the latest official data showed naphtha import volumes at a four-month low of 254,800 bpd in August, down by 17pc from July.

Russia remained the top supplier of naphtha at 37,000 bpd compared to zero in August last year, but inflows were a mere fraction of the 148,000 bpd imported in July.