Asia oil/products: Crude edges higher, product cracks mostly steady

12 Jul 2021

Quantum Commodity Intelligence – Middle East crude prices opened the week firmer, catching up with Friday’s Brent gains, while refined product cracks were little changed.

Dubai cash for September delivery was assessed $73.50/b on July 12 (1630 Singapore time), up $0.50/b from pre-weekend levels, while DME Oman settled $0.52/b higher at $73.61/b.

Cash Brent (BFOE) for September was assessed at $75.42/b, up $0.44/b, while the Brent/Dubai spread narrowed slightly to +$1.46/b

Meanwhile, Iraq's has increased its OSPs for Asian buyers lifting August crude oil. SOMO set the OSP for its flagship Basra Light grade at Platts Dubai/Oman +$2.25/b to Asia, up from +$1.45/b from June.

Basra Medium to Asia was also hiked by $0.80/b to Platts Dubai/Oman and set at +$1.35/b, while Basra Heavy was increase by $0.75/b to Dubai/Oman at -$0.65/b.

The increases were largely expected with August-crude seen tight in the absence of an OPEC+ agreement to increase production next month.  

Saudi Arabia and UAE remain deadlocked on the deal to add 400,000 bpd in August and a total of 2 million barrels by year end.

Both Saudi Aramco and ADNOC have turned down requests for additional barrels in August, according to sources.

Products 

Naphtha cracks rose again amid firm demand for both gasoline blending and as a petrochemical feedstock, with propane prices hauling naphtha higher. 1H September was marked at $691.50/mt CIF Japan – in between a bid and an offer of $691-692/mt – while 2H September traded at $691.50/mt. The flat price was marked at $687.50/mt CIF Japan, with the crack at $134/mt.

Gasoline cracks rose marginally on the day in a flurry of trades. Several deals were heard at $83.90/b FOB Singapore, which was a $0.50/b rise on the day to track crude. Cracks are at a five-day high of $8.94/b. 95 RON traded at $86/b, which was a rise of only $0.10/b on the day.

Despite regional lockdowns rolling, global aeroplane seat capacity crept 1.5% higher last week as North and South Asia expansion offset seat losses in southeast Asia, according to industry analysts OAG. Several indications were heard, but no deals, with jet fuel bid at $0.30/b under July swaps and offered at $0.40/b under late July swaps. That left the assessment pegged at $77.70/b, up $0.74/b on the day and at a three-week high of $2.74/b for the crack.

Diesel 10ppm spot cargoes were heard bid at $0.05/b under July swaps for nearby loading with offers at $0.10 under August swaps, leaving the cash differential marginally firmer than the $0.15/b discount seen last week. No deals were heard and cracks nudged up to a three week high of $5.50/b FOB Singapore. The market does remain subdued with spot cracks at the June average.

Fuel oil prices nudged higher, with all grades lagging the minor move north in  crude. Cash differentials were returning to normal with marine fuel trading at parity to swaps and high sulfur 380cst changing hands at a $0.50/mt premium to the futures curve. Bunker demand was said to be subdued.