Asia oil/products: Crude soars, distillate cracks hit pandemic high

14 Feb 2022

Quantum Commodity Intelligence – Asian crude prices raced higher Monday, catching up with Brent gains and the fresh impetus from geopolitical tensions in Europe, while middle distillate cracks climbed to fresh pandemic highs and gasoline refining margins are just $1/b shy of that peak.

Dubai cash for April delivery was assessed at $92.75/b February 14 (1630 Singapore time), up $2.54/b from the previous Asia close, while April DME Oman futures were down $2.46/b at $92.93/b – both Middle East benchmarks hitting new seven-year highs.  

Market backwardation also soared higher on fears of Russian supply disruptions, as the M1/M3 (Apr22/Jun22) backwardation rallied to +$3.84/b, while the one-year forward crude was at multi-year highs of over $12/b.

Qatar’s issued its regular Al Shaheen tender as premiums for April-loading barrels were pushing towards Dubai swaps $4/b, compared to around +$2.50/b last week.

April Cash Brent (BFOE) was assessed $94.49/b at 1630 Singapore time, up $3.04/b on the previous-Asia cash close, gaining on Dubai as European oil prices were given the greater uplift from Russian supply fears.

The April cash Brent/Dubai spread widened by $0.50/b to $1.74/b, while front-line April EFS ramped up $0.84/b to $5.58/b.


Naphtha prices rose $23.50/mt on Monday, outstripping the crude gains to leave the cracks at a three-month high. Physical cargoes remain pegged at $38/mt over swaps at $858/mt CIF for delivery mostly in H2 April and H1 May after finding support from gasoline. The so-called reforming spread - gasoline minus naphtha - widened to almost $16/b in Singapore. One physical deal was heard at $883/mt for prompt delivery. Bids for late April were heard at $840/mt. Supply from west of Suez remains tight amid higher European values. February and March east-wests are now firmly negative and April traded at $2.50/mt. Petchem margins are thin.

Gasoline cracks rose again Monday, climbing for the fifth straight session with swaps outperforming the crude rise on firmer regional demand. Cargoes of RON 92 were assessed at $110.34/b FOB Singapore, another pandemic high as crude rose on geopolitical fears. One deal was heard at $110.40/b FOB Singapore loading 20-25 days out, although it was for a larger vessel. Intermonth time spreads are now all above $2/b for the first time in years, reflecting growing tightness in the market. The 95-92 spread rose as the underlying values climbed. The RON 92 crack is now approaching $17/b, about $1/b shy of the pandemic high.

Jet was assessed at $107.81/b, up $3.54/b on the day as swaps outpaced crude on the back of a firmer diesel complex. No physical deals were heard and the crack versus Brent hit a pandemic high of $14.29/b. The regrade for February widened to a record low of -$4.50/b, highlighting the short-term weakness in jet, but the Q2 approached a two-week high, reflecting more optimism of a recovery in jet and a fall in diesel. The arb west is healthy, with the east-west at -$40/mt.

Diesel cracks neared $19/b during trade on Monday, yet another pandemic high, with a flurry of deals heard at values around $113-113.50/b FOB Singapore for loading 15-20 days forward. The strong physical backwardation left Quantum’s assessment for cargoes loading 15-30 days forward at $112.49/b FOB Singapore on a cash differential of $2.29/b. The March/April spread has jumped $0.45/b to $2.75/b on a widening EFS as European values rise on Russian supply fears. The EFS for March is at -$28/mt and April at -$21/mt, up $4.35/mt and $3.8/mt, respectively. That will make the arb west more profitable and drive up regional values.

Marine fuel 0.5% sulfur jumped to new highs amid wider upside for the oil complex, with the flat price jumping $22.25/mt to $726.25/mt. That came as the cash market saw almost only buy-side interest, with competitive bidding at the front and middle of the market raising Quantum’s cash differential assessment $1.15/mt to $15.60/mt FOB Singapore. It left spot cracks up another $0.50/b from Friday’s assessment at a two-month high of +$11.73/mt. In the paper market, the Mar/Apr spread jumped $2.25/mt and the M1/M2 spread is now at its highest in six weeks as supply tightness only slowly unwinds.

High sulfur fuel oil also pushed onto new highs with flat prices and differentials both up. Cash differentials on both viscosities jumped, with a higher front end bid for 180 CST lifting Quantum’s assessment $1.50/mt from Friday to a $1/mt FOB Singapore premium to nearby swaps and trades at the front-end of the 380 CST window lifting the assessment $2.60/mt to $3/mt. Despite the rally in crude, cracks for the residual fuels against Brent were able to pull back from their three-month lows touched last week, with 180 CST up $0.83/mt at -$10.09/mt and 380 CST up $0.51/mt at -$11.71/mt. Flat prices were up, with 180 CST gaining $22.50/mt to $529.75/mt and 380 CST $20.50/mt to $519.50/mt.