By Jessica Jaganathan
SINGAPORE(Reuters) - Asia's gasoline refining profits have outperformed all other oil products this year as a combination of lower crude prices and both seasonally and structurally strong demand pushed margins to a record high.
Margins for the motor fuel have gone up 222 percent since the start of the year, according to Reuters data. The surge in Asian gasoline margins is partly due to increased shipments ahead of the summer and partly due to high fuel consumption in the economies of Asia's biggest users. Car sales continue to soar in China, while India is pushing ahead with an urbanisation drive.
GRAPHIC: Asia product margins: https://bsmedia.business-standard.comlink.reuters.com/cyn84w
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In contrast, Asian refining margins for gasoil have been among the worst this year, falling nearly 14 percent since January. Gasoil is traditionally the main fuel consumed in Asia's industrial, transport and agriculture sectors.
Gasoil's problem isn't a lack of demand but instead one of oversupply, analysts say, with the Middle East planning to turn itself into the world's biggest refining region within the next three years. "Gasoil demand is relatively healthy but clearly the weaker margins are reflecting an oversupply of product (especially gasoil) which has been exasperated by the start-up of the big refineries in the Middle East," said Richard Gorry, director at JBC Energy Asia.
Margins for naphtha, used in the making of petrochemicals, rose 177 percent this year, but profits are coming from a low base. In fact, the margins are at their worst since 2013 as the feedstock is being replaced by cheaper and plentiful liquefied petroleum gas from the U.S., which is in the middle of a shale boom. Refining margins for fuel oil used in the marine and power generation sectors rose 27 percent this year on the back of summer demand. Jet fuel fell the most, down 16 percent since January, likely due to softer air travel demand as trade in Asia slows and economies take a pause.
(Editing by Ryan Woo)