Asia oil/products: Dubai slumps further, but distillate cracks ease

23 Sep 2022

Quantum Commodity Intelligence - Middle East crude prices Friday again came under pressure amid concerns over the global economic slowdown, but that was not enough to support middle distillate cracks as they slipped from Thursday's one-week highs.

Dubai cash for November delivery was assessed at $88.80/b for 23 September (1630 Singapore time), $2.40/b lower on the day, taking the two-day losses to over 4%, while DME Oman futures were down $1.97b at $89.28/b for the Nov22 contract.

Another busy partials window saw Dubai last traded at $88.80/b, setting the quote, while Oman partials were bid at $88.90/b. One more convergence was reported, with Exxon declaring Upper Zakum to Vitol at an equivalent of Dubai swaps +$4.90/b.

The prompt market structure eased slightly with the key M1/M3 spread (Nov22/Jan23), used by National Oil Companies in OSP calculations, down around $0.35/b on the day to $4.90/b.

ICE Brent futures for Nov22 were valued at $88.58/b at 1630 Singapore, down $2.51/b from the previous Asia close, maintaining a negative spread for Nov22 Brent/Dubai at minus $0.22/b. The Nov22 EFS retreated nearly $0.50/b to around $4.65/b at the Asian market-on-close.

On the light sweet grades, Malaysian Labuan was heard offered at around $12.50/b over Dated Brent, while ESPO was a gain indicated at a premium to Brent futures.


Buyers again dominated the naphtha cash market without finding any sell-side interest through the window, with Chevron bidding the 1H November laycan up to $661/mt CFR Japan and BP the 2H November to $672/mt. The latter was enough to raise Quantum's physical curve, with moves in a quiet swaps market leaving the outright price down $9/mt at $671.75/mt. The spot crack to Brent continued to rally for an eight consecutive session, posting a $1.63/mt rise to hit a fresh two-month high of $25.83/mt.

In the gasoline cash market, 92 RON traded twice for loading 19-23 October as PetroChina booked from Vitol at $87.40/b FOB Singapore. With lower offers at the front of the physical window, that shaved $0.11/b from Quantum's differential assessment and resulted in a flat price that was down $4.51/b and within a whisker of Monday's seven-month lows at $87.60/b. The spot crack to Brent slipped back into negative territory, losing $3.06/b to hit -$0.52/b.

Jet traded on a Vitol offer in the physical window, with Trafigura booking the 11-15 October loading cargo at a $0.30/b FOB Singapore premium to nearby swaps. Adjusted to take the market structure into account, Quantum shaved $0.01/b from Thursday's differential to leave physical assessed at a $0.20/b premium to swaps. That translated into an outright down $4.84/b at $122.30/b, with the spot crack to Brent falling $3.39/b to $24.18/b.

Spreads between diesel sulfur grades continued to be squeezed, with Vitol the sole bidder in the 0.25% and 500ppm markets. The 0.25% discount to gasoil swaps narrowed another $0.10/b to a fresh high of $1.34/b under the curve, while 500ppm jumped $0.65/b to a $0.05/b premium. In the 10ppm market, buyers and sellers remained far apart and Quantum's differential assessment held at a $1.62/b premium to swaps. Those moves left 10ppm down $4.22/b from Thursday ay $121.22/b, while 500ppm was down $3.91/b at $119.31/b, and 0.25% fell similarly to $118.51/b. Despite Brent sliding, the spot crack for 10ppm fell $2.77/b to +$33.10/b.

Marine fuel 0.5% sulfur had plenty of bids and offers through the window with the spread between buyers and sellers tightening, although no fresh deals were booked. That meant Quantum's cash differential remained steady at a $13.64/mt FOB Singapore premium to swaps, which left the outright down $19.65/mt day-on-day at $648.09/mt. The spot crack to Brent was down $1.39/b at $5.81/b.

High sulfur fuel oil physical trade was only represented by sellers at the end of the week. In the cash window, Vitol offered 380 CST cargoes along the strip at a flat price of $374/mt FOB Singapore without finding any buy-side interest. That left Quantum's cash differential steady as moves in the paper market left the outright down $11.09/mt at a two-week low of $369.05/mt.