Asia oil/products: Dubai backwardation widens, gasoline cracks tumble

11 Jun 2021

London (Quantum Commodity Intelligence) – Middle East crude benchmarks hit fresh two-year highs Friday, while backwardation on the Dubai market continued to underpin premiums for physical grades.

Dubai cash for August delivery was assessed at $71.16/b on June 11 (1630 Singapore time), up $0.51/b from Thursday’s Singapore close, while DME Oman futures for August settled $71.37/b at the Asia close, up 0.43/b.

On a weekly basis, both medium sour benchmarks were up 1.5%.

The front-line vs third-line (Aug/Oct) Dubai spread continued to push towards $2.00/b, which effectively lifts premiums for medium sour crude vs the Dubai swap to +$2.00/b or above.

Upper Zakum was heard bid at Dubai swaps +$1.85/b, but without trading. 

Cash Brent (BFOE) for August was assessed at $72.65/b, up $0.49/b from Thursday’s Asian close, while August Brent/Dubai narrowed further to $1.49./b.

Meanwhile, Kuwait set its July OSP at Platts Dubai/DME Oman +$1.25/b for Asian customers, up $0.10/b from June.

Products

Naphtha cracks firmed on the day, one trade for 1H August was heard at $645.50/mt, which indicated a firmer flat value. Quantum assessed at $641.75/mt CIF Japan for full August loading with a crack at $109.23/mt, clawing back all of Thursday’s losses.

Gasoline cracks continued to rise, with a deal heard for RON 95 indicating firmer demand. Cracks for RON 92 – the benchmark grade – were marked at $5.73/b, a fresh two-week high. Flat prices were assessed at $78.38/b FOB Singapore with bids and offers heard 2-5c/b either side.

Jet cracks remained in the bullish uptrend that started this week, with the crack rising to a three-week high of $3.26/b as cash differentials narrowed on bids. Flat prices were pegged at $75.91/b for spot and $76.45/b for July swaps.

Diesel 10ppm was heard offered at a $0.20/b discount to the underlying futures, which meant demand was weaker day-on-day for nearby loading of molecules. As a result, spot cracks fell $0.07/b to $5.86/b and July paper cracks rose $0.13/b to $6.65/b – another three-week high. Quantum assessed spot at $78.51/b FOB Singapore, $0.19/b below July swaps.

Fuel oil cracks firmed despite weaker crude and heavy stocks in Singapore.

Marine fuel 0.5% flat price and cracks rose marginally, with the former at $518.75/mt, up $3.25, and the latter marked at $2.39/b, using a 6.9 barrels/mt density factor.

Higher sulfur fuel oil cracks firmed slightly on the day too, with 380cst 3.5% marked at -$9.10/b – a three day high -with flat prices at $399.75/mt.