Asia oil/products: Dubai at fresh highs, gasoline cracks rebound

23 Jun 2021

London (Quantum Commodity Intelligence) – Middle East crude oil prices reached fresh 26-month highs Wednesday, while gasoline cracks rebounded on firm US demand.

Dubai cash for August delivery was assessed at $73.40/b on June 23 (1630 Singapore time), up $0.90/b from Tuesday’s Singapore close, while DME Oman futures for August settled $73.59/b at the Asia close, up $0.73/b.

However, Aug/Sep Dubai backwardation eased to around $0.85/b as the OPEC+ group comes under strong pressure to increase production as a counter to soaring prices when it meets next week.

Any additional production increase from August will likely push sour barrels onto the market, with most of the 23-member group at the heavier end of the production spectrum.

However, the more dovish members of the group are likely to point to sagging refinery margins in Asia as a reason for keeping current quotas unchanged for the third quarter.

Cash Brent (BFOE) for August was assessed at $75.55/b, up $0.83/b from Tuesday’s Asian close, while the Brent/Dubai spread narrowed slightly to $2.15/b.

Products

Naphtha cracks rebounded on Wednesday as swaps outpaced demand for crude. The July-August backwardation steepened to $6/mt versus $5/mt a day earlier on firm petrochemical demand. That left the assessed price at $658.50/mt CIF Japan.

Gasoline cracks rose to a three-week high as US and European cracks firmed and the east-west spread widened, despite a small rise in US stocks expected to be unveiled later on Wednesday. Gasoline cracks were marked at $5.95/b for RON 92 spec on a flat price of $81.50/b after a more prompt trade at $81.40/b. An additional RON 95 trade was heard at $83.20/b FOB Singapore.

Jet cracks rose for the first session in six on Wednesday as crude firmed. No deals were heard and the cash differential was assessed at -$0.30/b. That meant jet was at a flat price of $78.04/b FOB Singapore and a crack of $2.49/b, the latter was up $0.16/b on the day.

Diesel cracks stabilised Wednesday after five straight days of falls, rising to $5.09/b FOB Singapore for 10ppm on flat price of $80.64/b. No deals were heard and cash was assessed at -$0.10/b versus the swaps.

Higher sulfur fuel oil cracks fell to their lowest level in two weeks on Wednesday amid a rise in stocks in Fujairah to extend the bear trend. Higher crude prices will have pushed cracks down, but the prompt front month contango has started to widen for both high and low sulfur, indicating nearby weakness. Higher sulfur cracks were marked at -$10.24/b on a flat price of $414.75/mt FOB Singapore, the lowest since June 10. Marine fuel oil 0.5% cracks were marked at $1.66/b on a flat price of $532.75/mt FOB Singapore.