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Singapore 95/92 RON gasoline spread narrows to 5-month low

Singapore (Platts)--14 Jun 2018 1233 am EDT/433 GMT


The FOB Singapore 95/92 RON gasoline spread narrowed by 34 cents/b day on day to $1.77/b at the close of Asian trade Wednesday -- the lowest in five months, S&P Global Platts data showed.

The last low was seen on January 9, 2018 when the spread stood at $1.67/b.

The 95/92 RON gasoline spread has been hovering within $2-$3/b for the first half of 2018, averaging $2.58/b for the period of January 2 to June 13, Platts data showed.

"Fundamentally, regional demand for the 95 RON is relatively weaker compared to the 92 RON. That's why even though the 92 RON is also fundamentally weak right now, we're seeing a narrowing of the 95/92 inter-RON spread," a Chinese trader said.

Furthermore, "all the incremental production in the region is currently high octane and refineries want to capture that margin in the higher value parts of the gasoline pool," a Singapore-based trader said.

"Coupled with more Chinese barrels and good blending margins, a lot more 95 RON is being produced," the same source added.

In addition, the low MTBE factor is another main reason driving the production of 95 RON gasoline within the region, trading sources said.

"It's cheaper to produce 95 RON now given the low MTBE factor, and that has led to the oversupply of 95 RON," another Singapore-based trader said.

The FOB Singapore MTBE factor has slumped to a multi-year low of 1.107 at the close of Asian trade Wednesday, Platts data showed.

The MTBE factor measures the ratio between the daily assessments for FOB Singapore MTBE and 92 RON gasoline.

FOB Singapore MTBE prices were assessed at a three-month low of $762.50/mt at the close of Asian trade Wednesday. The last low was at $756/mt on March 20, Platts data showed.

--Brandon Lee, brandon.lee@spglobal.com

--Edited by Irene Tang, irene.tang@spglobal.com




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