Asia oil/products: Crude rebounds, distillate cracks at 1-month low

4 Jul 2022

Quantum Commodity Intelligence - Middle East crude markets started the week on a firm footing for both flat price and structure, while distillate cracks were back on the slide after Friday's Indian export policy-driven rally.

Dubai cash for September delivery was assessed at $108.40/b for the 4 July (1630 Singapore time), up $2.09/b from the previous Singapore close, while DME Oman futures for the Sept22 contract closed at $108.44/b, up $2.04/b.

Backwardation remains elevated with M1/M3 (Sep22/Nov22) valued at around +$9/b, seen underpinning hefty spot premiums for September-loading barrels when activity picks up after the release of Saudi OSPs early this week.

Aramco is seen likely to hike its flagship Arab Medium by around $2.50/b for August, after M1/M3 Dubai averaged $7.54/b in June, compared to $5.13/b in May,

ICE Brent futures for Sep22 were assessed at $111.08/b on the Singapore 1630 close, down $1.63/b from the previous Asian close. The September Brent/Dubai cash narrowed to $2.68/b, while the September Brent/Dubai EFS consolidated above $12/b.


Naphtha paper markets were generally quiet, but a best bid for a 1H September shipment cargo from Glencore was heard at $840/mt CFR Japan and lifted the front end of the cash assessment window. With other laycans quiet, the slightly steeper physical backwardation lifted the outright $10/mt to $835.75/mt. The spot crack to Brent was essentially unchanged, marked $0.40/mt lower at $24.25/mt.

Gasoline physical trades were booked at the front end of the cash market by ENOC, with sellers including PetroChina, Shell, and Vitol offloading cargoes of 92 RON at $140.20/b, 95 RON at $149.90/b, and 97 RON at $151.90/b. With the structure of the physical curve unchanged, that mean 92 RON was up $1.75/b at $139.15/b, while 95 RON was up $3.55/b to $148.85/b and 97 RON up $3.75/b at $150.85/b. With that, the spot crack to Brent jumped, with 92 RON up $0.33/b at +$28.44/b while 95 RON surged $2.13/b to +$38.14/b.

Jet started the week with only Aramco seen offering physical cargoes into Asia, with a $3.95/b FOB Singapore premium along the strip well above where prevailing value sat from Friday. With the cash differential assessed unchanged at $2.20/b over swaps, moves in the paper market meant the flat price was down $2.64/b at a one-month low of $150.48/b, with the spot crack to Brent sliding $4.06/b to +$39.77/b.

Diesel saw a 10ppm trade booked straddling the front and middle of the cash market from Trafigura to Vitol at $4.80/b FOB Singapore premium to nearby swaps, which weighed on the market along with aggressive offers along the curve. Quantum assessed the cash differential down $1.34/b from Friday at $4.25/b, which left the outright price down $3.49/b at a one-month low of $163.21/b. Refining margins also slipped to a one-month low, with the spot crack to Brent falling $4.91/b to +$52.50/b.

Marine fuel 0.5% sulfur saw a trade at the front end of the market at a $83/mt FOB Singapore premium to July paper confirmed the physical market structure was unchanged from Friday, with the differential left at a $74.25/mt premium to nearby swaps. That left the outright price up $22/mt at $1,006.50/mt, with the spot refining crack to Brent up $1.77/b at +$35.16/b.

High sulfur fuel oil continued to weaken against 0.5%S marine fuel. Bids and offers remained far apart along the curve, with Quantum again assessing the 380 CST cash differential at a $0.25/mt FOB Singapore discount to nearby paper. On the outright, that was down $21/mt from Friday at $520/mt and widened the Hi5 spread another $43.75/mt to a fresh all-time high of $486.50/mt.