Asia oil/products: Dubai at 5-month low, distillate cracks dip

5 Aug 2022

Quantum Commodity Intelligence - Middle East crude was sharply lower Friday and slumped to a fresh five-month low with this week's OPEC+ meeting and record Saudi OSPs failing to halt the slide.

Dubai cash for October delivery was assessed at $93.76/b for 5 August (1630 Singapore time), down $1.95/b from the previous session, the lowest since the final week of February, while DME Oman futures for the Oct22 contract were down $2.68/b at $94.37/b.

Asian crude markets initially stabilized after Saudi Aramco announced its flagship Arab Light OSP at a record Dubai/Oman +$9.80/b, which although broadly in line with expectations, signalled there would be no shortage of takers for October barrels heading into the key Q4 refining season.

Wednesday's OPEC+ meeting did little to alleviate the downtrend despite a modest hike of just 100,000 bpd in September, with Asian focus clearly on demand destruction.

Market structure, meanwhile, consolidated at lower levels with the key M1/M3 spread (Oct22/Dec22) around +$5.50/b, while the one-year Dubai curve narrowed to the lowest since April, valued at around $12.20/b.

ICE Brent futures for Oct22 were valued at $94.46/b at the Singapore 1630 close, down $2.34/b from the previous Asian close. The October Brent/Dubai cash spread narrowed to $0.70/b, while the October Brent/Dubai EFS was slightly high at around $7/b.


The naphtha cash market continued to see the number of participants pick up without any new business being booked. Vitol was the best-priced seller on show Friday, offering a 2H October shipment cargo at $707/mt CFR Japan. That left Quantum's cash assessment down $20.75/mt from Thursday at $708.50/mt, with the spot crack to Brent easing $2.79/mt to +$18.60/mt.

In the gasoline cash market, a 92 RON cargo changed hands from Shell to Phillips 66 for loading 15-20 days ahead at $100.40/b FOB Singapore. For 95 RON, Aramco sold to Unipec for similar load dates at $104/b, with a cargo loading 20-25 days ahead booked at $103.70/b. With that, the 92 RON flat price was marked $4.93/b lower at $100.08/b, while 95 RON was down $5.10/b at $103.81/b. On the crack, 92 RON slipped $2.48/b to +$5.96/b and 95 RON was down $2.65/b at +$9.69/b.

Jet yet again continued to be defined by little fresh interest in the Asian cargo market, with Quantum's cash assessment holding steady at a slim discount to the more vibrant paper market. That left the flat price down $4.34/b at $121.40/b, with the spot crack to Brent falling $1.89/b to +$27.28/b.

Diesel had a tight bid-ask spread in the 0.25% market saw Trafigura and Vitol narrowing the discount to paper $1.20/b to $5/mt under, while a 500ppm deal from Mercuria to Vitol was booked for loading 15-20 days out at $4.10/b FOB Singapore under swaps. The 10ppm market was defined by PetroChina offering cargoes for loading 15-20 days ahead at $1.20/b in Singapore against adjusted buying interest from Total at a similar level, which did not trade. That weighed on the front of the curve and dragged Quantum's cash differential $0.34/b lower to $1.25/b, which gave an outright price down $5.21/b at a five-month low of $130.20/b. The spot crack fell $2.76/b versus Brent to +$36.08/b.

Marine fuel 0.5% sulfur had a wide bid-ask spread with only Trafigura and Vitol in the market meant no cargoes changed hands, with Quantum's cash assessment assessed unchanged at $17.87/mt FOB Singapore over the curve. The flat price fell $23.11/mt from Thursday to a fresh seven-month low of $675.69/mt, with the spot crack to Brent falling $0.90/b to +$3.81/b.

The high sulfur fuel oil cash differential came under downward pressure in the 180 CST market, easing off its recent highs as Sinopec offered down through the window. Looking to offload cargoes at $1/mt above swaps, that took $3/mt off Quantum's assessment and left the differential assessed at a slim $0.05/mt under paper. For 380 CST, a wide bid-ask spread kept the assessment steady from Thursday. That left the 180 CST flat price down $10.74/b at $484.50/mt, while 380 CST was down $8.23/mt at $458.64/mt.