Asia oil/products: Crude prices ease, naphtha keeps edging higher

Quantum Commodity Intelligence - Crude oil prices in Asia were slightly lower on the day Tuesday, registering a small monthly gain on the Apr23 contract, while naphtha prices continued to edge higher as flows from Europe look set to slow to a halt.

Dubai cash for April delivery was assessed at $81.90/b for 28 February at the Asia close (1630 Singapore), down $0.25/b versus the previous session, and compared to $80.68/b for the same contract on 31 January.

Apr23 DME Oman futures closed $0.02/b higher on the session at $81.97/b for a monthly average of $82.23/b.

A busy month for Dubai partials closed out with two more Apr23 convergences taking the total to 17, primarily made up of Upper Zakum and supplemented by Al Shaheen.

Tuesday’s last-traded price of $81.90/b valued both grades at Dubai swaps +$2.20/b, while early talk for May cargoes was heard at Dubai swaps +$1.75-$1.85/b.

ICE Brent futures for Apr23 were assessed $82.81/b at 1630 Singapore, down $0.43/b from the previous Asia close, while the Apr23 Brent/Dubai closed the month at around +$0.90/b and May was heard +$1.85/b. The May23 EFS was stable, trading at $3.55-$3.60/b on the Asia market close. 

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Naphtha swaps continued to gain in strength despite the declining crude complex, with refining margins for non-Russian naphtha in Asia against Brent climbing again. The east-west remains negative, albeit marginally at -$2.50/mt, and flows of non-Russian naphtha from Europe are expected to slow to a trickle for March and April, according to analysts. With the flow falling to 1 million mt in March, according to Refinitiv, Russian naphtha is expected to find a home in Asia, with Mediterranean supplies instead headed north. Month-ahead paper cracks remain elevated at near seven-month highs. In the physical market, one deal was heard at $734/mt CFR Japan as BP sold to Sietco. That left the outright up for a third successive session, with the $2.25/mt gain taking it within touching distance of a seven-month high at $726.75/mt.

Gasoline swaps shrugged off the rise in naphtha to track crude broadly lower. There were no physical trades in either 92 or 95 RON cargoes and the cash differential was assessed unchanged at $0.67/b, giving a flat price of $93.65/b FOB Singapore, down $0.53/b on the day.

Jet swaps were broadly unchanged on the day against a declining crude complex, narrowing the regrade, but it was marginal. BP was offering a cargo at $2/b over swaps – more than $1/b higher than where Quantum pegged value. With values in Europe surging overnight, the east-west widened to -$53/mt. It is now at a near two-week low and $16/mt wider than a week ago. Chinese exports are expected to ease over the coming months with domestic demand rising – a dynamic that could keep a lid on a further widening of the spread.

Diesel swaps fell marginally on the day, tracking movement in Brent crude futures and largely ignoring a rally in European cracks to widen the east-west spread. Brent futures eased $0.40/b by the Singapore cash market close, compared with a day earlier, while M1 and M2 swaps for 10ppm fell $0.18-$0.38/b. The M1/M2 backwardation softened slightly while the EFS widened to -$38/mt for the month ahead – a two-week low. On the physical side, BP bid a cargo at $0.50/b over swaps, with Vitol offering at the same level, albeit for two different loading dates. The cash differential was assessed at $0.50/b, equivalent to $105.55/b FOB. The rise in European values came despite persistently high loadings out of Primorsk.

There were no fresh deals reported by time of press in a quiet session for marine fuel 0.5% sulfur and that left the cash differential steady at a slim $5.98/mt FOB Straits premium to the curve. Moves in the paper market left that translating into an outright that was largely flat day-on-day, with the outright price down $0.05/mt to $574.04/mt. The spot crack to Brent was marked $0.38/b higher at a slim +$0.65/b.

High sulfur fuel oil prices eased off a touch on Tuesday despite crude prices rising, with swaps prices marked lower by brokers during the Asian session. That came as regional supply of residual fuels remained buoyant. No fresh deals were seen during the window, with differentials on both viscosities left unchanged. The 380 CST outright was down $1.53/mt at $404.10/mt FOB Straits.