Asia oil/products: Dubai resumes rally, diesel cracks slump to 6-week low

22 Jun 2021

London (Quantum Commodity Intelligence) – Middle East crude oil prices resumed the June upwards trend Tuesday, while distillate cracks tumbled to a six-week low.

Dubai cash for August delivery was assessed at $72.50/b on June 22 (1630 Singapore time), up $0.75/b from Monday’s Singapore close, while DME Oman futures for August settled $72.86/b at the Asia close, up $0.95/b.

In the cargo market, Taiwan was heard buying Upper Zakum at August Dubai swaps +$2.00/b, a premium consistent with the current market backwardation of around $2.00/b between cash Dubai and the Dubai swap.

Upper Zakum has been setting the Dubai cash assessment so far this month as the lowest of the five ‘Dubai basket’ grades, including several Upper Zakum deliveries against Dubai partials.

Cash Brent (BFOE) for August was assessed at $74.72/b, up $0.95/b from Monday’s Asian close, as Brent continued to outpace Middle East grades. The Brent/Dubai spread widened out to $2.22/b, while the Brent/Dubai EFS hit another two-year high of $4.15/b.

In the East Asian market, WTI Midland was heard sold into China at around Dated Brent +$2.00/b CIF.

Products

Cracks eased across the board on Tuesday as product demand lagged higher crude, with the exception of gasoline, which saw margins move marginally higher on spot demand.

Naphtha cracks were slightly down on the day, again failing to keep up with firmer crude. Flat price for 2H August, 1H September was pegged at $646/mt CIF Japan, up $7/mt on the day with the crack pegged at $96/mt.

Gasoline 92 RON cracks firmed $0.07/b to $5.38/b, taking cracks to a one-week high. One spot deal for 95 RON was heard at $80.10/b FOB Singapore, with 95 RON trading at $81.65/b. The rise in gasoline comes amid mobility data suggesting static journey growth bar in India.

Softer jet paper cracks pressured spot prices on Tuesday, with the cash differential unchanged at -$0.30/b ($77.03/b FOB Singapore). That left spot cracks at $2.32/b, near a two-month low amid reports of softer airline demand. No deals were heard.

Diesel 10ppm cracks fell to their lowest level in more than six weeks on Tuesday with the cash differential marked unchanged at $0.10/b under swaps at $79.65/b FOB Singapore. That pushed the spot crack down to $4.97/b, the lowest since May 7 as India ramps up exports.

Higher sulfur fuel oil cracks were broadly stable on Tuesday on healthy bunker demand. No deals were heard and cracks were marked at -$10.07/b for 380cst 3.5% sulfur, up $0.04/b on the day. Flat price was assessed at $410.50/mt. Marine fuel 0.5% cracks fell alongside distillates at $1.58/b, down $0.08/b on a flat price of $526.50/mt. No deals were heard.