Asia oil/products: Crude rally resumes, product cracks slide

16 Jun 2021

London (Quantum Commodity Intelligence) – Middle East crude prices resumed the sharp uptrend Wednesday amid increasing signs of a tight market in the third quarter, while refined product cracks were squeezed.

Dubai cash for August delivery was assessed at $72.75/b on June 16 (1630 Singapore time), up $1.00/b from Tuesday’s Singapore close, while DME Oman futures for August settled $72.76/b at the Asia close, up $0.84/b.

Middle East sour crude prices are now at the highest levels since April 2019 and have also doubled since November of last year.

Premiums for August-loading medium sweet barrels were seen trading at the highest levels of the year, including Upper Zakum at around $2/b, while light sweet Murban was reported at around $2.85/b.

Cash Brent (BFOE) for August was assessed at $74.29/b, up $1.25/b from Tuesday’s Asian close, as the North Sea marker outpaced the Middle East, widening the Brent/Dubai spread to $1.54/b.

Products

Most refined product cracks slid on Wednesday as higher crude weighed on margins, the only exception being higher sulfur cracks which rose.

Naphtha cracks slid to the lowest level since mid-May with one deal reported amid firmer demand. One deal was heard at $639/mt for early September delivery. Quantum assessed at $641.50/mt CIF Japan.

The gasoline RON 92 spec crack fell to a one-week low of $4.86/b on a lower cash differential. Bids and offers failed to yield a trade, according to market sources. Flat prices were assessed at $79.15/b. RON 95 was marked at a $1.45/b premium. The fall comes as light end stocks in Fujairah surged 43% in a week and Indian refiners reported gasoline demand was up 13% in the first half of June on the month.

Jet cracks also slid to a one-week low of $2.86/b, although no deals were reported. Middle distillate stocks in Fujairah fell 10% as the rise in jet swaps in Singapore lagged the rise in crude. Flat prices were marked at $77.15/b FOB Singapore.

Diesel cracks fared better, buoyed by information that diesel demand in India was up 12% on the month. While spot cracks were down to $5.74/b. Paper cracks for July and August were largely unchanged. Cash differentials were marked as flat to the curve.

Two deals for fuel oil pointed to firmer cash differentials for all three grades in Asia. After trading at a steep discount of between $2-3/mt earlier this month, cash differentials were marked as flat after trades at flat to swaps and $0.50/mt were seen for 380cst and 0.5% marine fuel. Cracks firmed accordingly as swaps firmed, buoyed by lower stocks in Fujairah. 380cst cracks were marked at -$7.71/b, down $0.42/b on the day, while 0.5% marine fuel was marked at $2.30/b, down $0.16/b.