Asia oil/products: Dubai slumps below $80/b, product cracks slip
Quantum Commodity Intelligence - Asian crude prices were sharply lower Thursday as Dubai tumbled below $80/b for the first time since early January,
Dubai cash for January delivery was assessed at $77.64/b for 24 November (1630 Singapore time), down $4.14/b on the day, while Jan22 DME Oman futures were $4.31/b lower at $77.50/b.
Asian markets were again crushed by the twin threat of sluggish demand growth as China continues its zero-Covid strategy, while a potential glut of Russian barrels heading for Asia also continues to weigh on sentiment.
Spreads slumped again as the prompt M1/M3 spread (Jan23/Mar23) set a fresh 2022 low of $0.85/b, while perhaps more tellingly, the spreads for the first half of 2023 crashed into contango.
ICE Brent futures for Jan23 were assessed at $84.80/b at 1630 Singapore, down $4.35/b from the previous close, while the Jan23 Brent/Dubai spread consolidated above +$7/b. The Jan23 EFS narrowed around $0.40/b on the day to $8/b at the Asia market close.
No indications surfaced on naphtha, and cargoes were assessed in line with the paper at $689.75/mt, around $11.75/mt above swaps. Cracks firmed $2.13/b on the day to -$7.24/b against ICE Brent crude.
Gasoline fell against both crude and underlying swaps on Thursday on sharp selling pressure. Petrochina sold a 92 RON gasoline cargo to Vitol at $89.80/b on 9-13 December loading dates and was assessed accordingly at $89.74/b on mid-window dates, down $0.83/b against the paper. Cracks eased $0.14/b on the day to a $5/b premium to ICE Brent crude.
Diesel cracks slipped as physical prices lost ground to crude and the underlying paper in a thinly attended session. Petrochina offered down to $2.80/b over swaps for a 10ppm cargo on mid-window loading dates, which pushed the day’s assessment down $0.55/b against the paper to $117.60/b. Cracks slipped $0.71/b on the day to $32.86/b as support drained from Europe overnight.
Liquidity on jet fuel was little better, as Vitol placed the only offer for a cargo on 8-12 December dates down to $4.50/b against December swaps. It did not test value, and jet fuel FOB Singapore cargoes were assessed at a $3.85/b premium to swaps at $115.85/b, down $4.80/b on the day in line with the paper. Cracks fell $0.96/b on the day to $31.11/b.
Marine fuel 0.5% sulfur saw Gunvor bid up November paper as well as the front end of the cash curve, with a bid for a Dec 9-13 cargo at a $7.50/mt FOB Straits premium to November paper. Equivalent to $617/mt, that front end bid went unhit as sellers remained reluctant to offer into the front end, while a mid-window bid at a $19/mt premium to the curve was taken by Shell. That lifted Quantum’s differential $2.62/mt to $21.69/mt and gave an outright price that was $24.77/mt lower day-on-day at $611.17/mt. With crude coming off, however, the drop in paper was not enough to override another day of gains in the spot crack, which was up another $0.25/b as it neared a one-month high of +$3.84/b.
High sulfur fuel oil again saw little sell-side interest as tight spot supply trumped a wider sell-off in the oil market. 380 CST was bid along the curve at a $7/mt FOB Straits premium to the curve, which was not enough to adjust Quantum’s differential assessment as it held at $10.07/mt. Moves in the paper market left HSFO assessed $20.70/mt lower day-on-day at $375.92/mt. In Singapore, weekly data showed residual fuel stocks falling 1.9 million barrels last week to a three-week low of 19.3 million barrels.