Asia oil/products: Dubai M1/M3 soars above $2/b, cracks soften

14 Jun 2021

London (Quantum Commodity Intelligence) –The Dubai cash first-line versus third line (August vs October) spread widened Monday to more than $2 per barrel for the first time since January 2020, on expectations of surging demand and tight supplies during the second half of the year.

Dubai cash for August delivery was assessed at $72.04/b on June 14 (1630 Singapore time), up $0.88/b from Friday’s Singapore close, while DME Oman futures for August settled $72.14/b at the Asia close, up 0.77/b.

Upper Zakum is currently at parity to cash Dubai, setting the Dubai quote as the lowest of the ‘Dubai basket’ grades of Dubai, Oman, Upper Zakum, Al Shaheen and Murban, but spot premiums were quoted in excess of $2/b over Dubai swaps. 

Premiums for distillate-rich lighter crudes have also been moving sharply higher with Abu Dhabi’s Murban valued at around Dubai swaps +$3/b, while Russian Sokol was heard changing hands at close to Dubai swaps +$4/b.

The Brent/Dubai EFS (exchange of futures for swaps) has also been impacted by the wider Dubai backwardation, since the EFS also includes the two months of market structure.

The front-month August EFS was assessed at $3.52/b Monday, the widest spread since late April.

Cash Brent (BFOE) for August was assessed at $73.47/b, up $0.82/b from the Friday’s Asian close, while August Brent/Dubai narrowed further to $1.43./b.

Products

Asian cracks broadly fell in trade on Monday as crude rises continued to outstrip demand for underlying products.

Gasoline cracks were the exception, with RON 92 refining margins hitting a two week high as spot prices rallied sharply on news that Reliance’s export-oriented refinery in Gujarat had suffered an unexpected outage. One trade for late June loading was heard at $79.50/b FOB Singapore with a RON 95 trade heard at $80.80/b for mid-July loading.

Naphtha cracks fell marginally as crude rallied. Bids were heard for 2H August delivery at $644/mt. No deals were heard.

Jet kero cracks fell sharply amid a softer swaps market. Cash differentials narrowed but not enough to offset a sharp fall in front month paper cracks, which fell to $4.03/b from $4.40/b on the day amid news that European flight growth was slowing and a likely delay to the easing of restrictions in the UK. CIF NWE jet cracks by 0930 BST were down $1/b. Spot cracks were marked at $2.97/b, down $0.30/b on the day. Flat prices were assessed at $76.44/b FOB Singapore.

Diesel spot and paper cracks also dipped, but again cash differentials were firmer, although no deals were heard. 10ppm Bids were heard at $0.10/b under the underlying curve. Spot cracks were marked at $5.49/b, down $0.35/b on the day and front month cracks were $0.42/b down on the day. Flat prices were at $78.96/b, up $0.45/b on the day.

Low sulfur fuel oil cracks continued to weaken hitting a two-week low amid softer distillate cracks. Higher sulfur cracks were broadly stable. 380 cst was marked at $404/mt versus $397.25/mt on Friday. Marine fuel was pegged at $520.50/mt, up $2.75/mt on the day. Cracks were up $0.18/b for higher sulfur fuel oil at -$8.42/b with 0.5% sulfur down $0.43/b at $1.96/b.