Asia oil/products: Dubai rallies 4%, naphtha cracks continue surge

22 Jul 2021

Quantum Commodity Intelligence – Middle East crude rallied strongly Thursday as Dubai made gains on Brent, while Singapore distillates and gasoline cracks also firmed.

Dubai cash for September delivery was assessed $71.40/b on July 22 (1630 Singapore time), up $2.76/b, or 4%, from the previous session, while DME Oman was up $2.81 at $71.56/b.

Cash Brent (BFOE) for September was assessed at $72.62/b, up $2.45/b on the Wednesday Asia close. Brent gained around 3.5% to close the Brent/Dubai cash spread by around $0.30/b to $1.22/b, the narrowest cash spread since late March

Dubai inter-month spreads also strengthened on the flat price rally, with Sept/Oct and Oct/Nov both in the +$1.15 to +$1.20/b range.

But weighing down the Asia spot market is the lack of appetite from China. Surgut’s early-mid-September cargoes were reported awarded at Dubai swaps +$2.75-$2.85/b, while last-decade September cargoes were later awarded in the Dubai +$2.50/b range – around $1/b down from the August premiums.

Naphtha cracks basis CIF Japan rose again to hit another multi-month high, as light end stocks in Singapore fell a heavy 16% over the past week. Stocks for naphtha are said to be at a multi-month low and more broadly light end stocks are 13% below the average so far this year. 2H September was bid at $677/mt, while October was bid and offered in a $9/mt spread of $665-674/mt CIF Japan. Quantum assessed at $673.75/mt with a crack versus Brent of over $140/mt.

Gasoline cash differentials firmed to claw back Wednesday’s losses on what was seen to be bullish US stock data and lower inventories in Singapore. RON 92 spot and month ahead cracks jumped more than $0.80/b with the Aug-September spread jumping to $1.40/b from $1.15/b a day earlier. Deals were reported pegging spot value at $81.10/b FOB Singapore.

Jet cash differentials turned positive on strong buying interest for the first time in months, pushing the crack to the highest level in more than a month at $3.46/b, up $0.29/b on the day. Bidding interest was heard at flat to August swaps with offers also flat although pricing on slightly different days. That meant jet was assessed at a slight premium – equating to a flat price of $76.08/b FOB Singapore.

Diesel 10ppm was also assessed at a small premium to swaps as prices for both distillates rose. Bids were seen at flat to August swaps, equating to a flat price of $78.34/b FOB Singapore and a crack of $5.72/b – the highest since mid-June. No deals were heard and Singapore weekly stock figures were stable.

While other cracks strengthened, fuel cracks fell as Singapore stocks rose to a six-week high. Marine fuel cargoes traded at a $1/mt premium to swaps, slightly lower on the day and a figure that pegged spot prices at $522/mt FOB Singapore. No information was heard for 380cst 3.5% sulfur, but there were trades and bids that indicated value for 180cst was anywhere between $2-13/mt over swaps. Quantum assessed at a $7/mt cash differential.