Singapore gasoline cracks weaken… EIA

Here is the EIA explaining why gas cracks in Singapore have weakened:

“Several factors are contributing to lower Singapore gasoline crack spreads. First, in addition to the new refinery capacity expansions in China, other countries in the region have added capacity since 2014–15, including Saudi Arabia, the United Arab Emirates, India, and Vietnam. Although some of the output from these refiners is meeting domestic demand, the increase in gasoline production is also adding supply to the regional gasoline trading pool.

Second, Chinese regulatory changes since 2015–16 increased capacity utilization for private sector refiners. Before 2015–16, these refiners had limited access to crude oil imports and ran fuel oil, a lower-quality feedstock. In 2015, the Chinese government began granting licenses to these refiners to import crude oil, allowing them to increase utilization and produce higher-value petroleum products, such as gasoline, for Chinese domestic consumers. Simultaneously, the government granted China’s state-owned refiners—Sinopec and PetroChina—increased petroleum product export quotas as they expanded capacity and produced more petroleum products.

Third, Chinese domestic demand growth for transportation fuels has decelerated. China’s gross domestic product grew 6.2% in the second quarter of 2019, the slowest quarterly growth rate since estimates began in 1992, and passenger car sales in China have declined on a year-over-year basis for 13 consecutive months. Most of China’s oil demand growth is now in petrochemicals, not transportation fuels.”