Asia oil/products: Dubai backwardation steepens, jet cracks rise, fuel falls  

10 Jun 2021

London (Quantum Commodity Intelligence) – Middle East crude eased Thursday following global benchmarks, but structurally Dubai strengthened to its widest backwardation since January 2020.

Dubai cash for August delivery was assessed at $70.65/b on June 10 (1630 Singapore time), down $0.45/b from Wednesday’s Singapore close, while DME Oman futures for August settled $70.94/b at the Asia close, down 0.44/b.

Expected tightness moving into Q3 lifted the Aug/Sep spread to $1.10/b, while Aug/Oct was at $1.90/b, as OPEC+ takes a cautious approach to releasing barrels and the threat of a flood of Iranian crude in the next quarter diminishes.

"I think the market had priced in too much Iranian crude for third quarter," said one source, adding that if sanctions are relaxed the initial wave will be more condensate as opposed to crude.

Cash Brent (BFOE) for August was assessed at $72.16/b, down $0.59/b from Wednesday’s Asian close, while August Brent/Dubai narrowed to $1.51/b.


Naphtha cracks retraced to $107/mt on Thursday after a three-week bull run that has seen premiums rise 20%. There was buying interest for H2 August at $631/mt versus selling at $636/mt CIF Japan. Quantum assessed at $636/mt.

Gasoline cracks eased after the US posted a huge stock build that outweighed news of a 1-million barrel draw in Singapore that has seen cracks firm. One trade was heard at $77.60/b FOB Singapore, which was where Quantum assessed. The crack was marked at $5.44/b, down $0.21/b on the day.

One jet kero deal was heard at -$0.50/b under the underlying swaps on Thursday, which kept spot cracks firm, but the paper cracks rose to their highest level in weeks. Distillate stocks in Singapore remain 19% below this year’s average, lending support. Spot was assessed at $75.09/b, down $0.61/b on the day and the front-month crack was marked at $4.17/b, up $0.14/b on the day.

Diesel 10ppm cracks were broadly steady as they have been all week. The long decline in stocks means cracks remain holed just under $6/b. The cash differential was marked at -$0.05/b, leaving a spot price of $78.09, a $3/b premium to jet kero. The crack was $5.93/b, down just $0.06/b on the day.

A second successive week of stocks build in fuel oil pressured cracks. This week a 5% build followed last week’s 12% build to leave both higher sulfur and marine fuel lower on the day. Marine fuel cracks were $2.33/b, down $0.46/b on the day, while higher sulfur was -$10.35/b down $0.20/b on the day. Both were the lowest since May 31.