"Looks like LPG will be in the cracking pool for the entire year," said a source who tracks naphtha and LPG, pointing out that the contango in the LPG market - where front-month contracts trade at a discount to later-dated prices - is particularly deep. A contango structure is usually a result of oversupply. Suppliers providing buyers with more term supplies had also limited spot demand, industry sources said.
Sellers have the option to supply 10% above or below a contracted volume to buyers depending on fundamentals. Asia's gasoline profit margin was at a three-session high of $6.80 a barrel. Indonesia's Pertamina has awarded a tender to buy gasoline for September delivery. The volumes secured were not clear but it had initially been seeking 1.1 million barrels of spot cargoes for September delivery.
Traders said Pertamina, Asia's top gasoline importer, had paid a discount of 50 cents to $1 a barrel to Singapore quotes on a free-on-board (FOB) basis for fuel lifting from Southeast Asia. This was higher than the discount of about $2 a barrel it had paid in a quarterly term contract with sellers. Refiner Philadelphia Energy Solutions is laying off the majority of its unionized workforce on Tuesday and Wednesday, the union's president said, ahead of an initial layoff deadline.