Asia oil/products: Dubai weaker, distillate cracks keep rising

22 Sep 2022

Quantum Commodity Intelligence - Middle East crude prices Thursday were lower, reflecting the broader selloff after the US Federal Reserve raised interest rates to a 14-year high, while distillate cracks continued to rise.

Dubai cash for November delivery was assessed at $91.20/b for 22 September (1630 Singapore time), $1.50/b lower on the day, while DME Oman futures were down $1.59/b at $91.25/b for the Nov22 contract.

A lively partials window saw Dubai last traded at $91.20/b, setting the quote, while Oman partials were bid at $91.30/b. Two more convergences were reported, including Exxon declaring Upper Zakum to Vitol and PetroChina an Al Shaheen, also to Vitol, valuing both grades at a Dubai swaps equivalent of around +$5.25/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 $0.30/b on the day to $5.25/b, while the one-year curve also retreated by $0.30/b to $14.60/b.

ICE Brent futures for Nov22 were valued at $91.09/b at 1630 Singapore, down $1.86/b from the previous Asia close, once again flipping the Nov22 Brent/Dubai cash spread back to a negative of minus $0.11/b. The Nov22 EFS retreated by $0.65/b to around $5.15/b at the Asian market-on-close.

Meanwhile, Worldscale rates for VLCCs on the benchmark Middle East Gulf-China route hit W100 this week for the first time since April 2020, which equates to more than $20/mt, or around $3/barrel in freight charges.


The buy-side of the naphtha market was busy during Asian trading but failed to find any sellers through the window as the 1H November laycan was bid up to $678/mt CFR Japan by Chevron and 2H November to $681/mt by BP. The latter was enough to lift Quantum’s physical assessment, with moves in the paper market helping to limit losses in the spot price to just $3.25/mt as the market was assessed at $680.75/mt. The spot crack versus Brent was up for a seventh-consecutive session, jumping $15.15/mt to a two-month high of $24.20/mt.

There was a single gasoline cargo that traded during Asian trading hours as Trafigura hit a 92 RON offer from PetroChina for loading 7-11 October at a $1.50/b FOB Singapore premium to nearby swaps. That weighed on 92 RON, which was assessed $2.56/b lower at $92.11/b as 95 RON and 97 RON held up better. The 92 RON crack managed to hold its ground despite the outright falling, slipping just $0.05/b versus Brent to $2.54/b. Further along the curve, however, refining margins remain under pressure, with the October crack falling $0.36/b to just +$0.49/b. In Singapore, stocks data showed a 1% drop in inventories to a 10-week low of 15.4 million barrels.

The Asian jet cargo market was yet again dominated by sellers, with Aramco and Vitol in the window offering cargoes along the strip between them. Those offers remained well away from Quantum’s physical differential assessment, which remained at $0.21/b FOB Singapore. Moves in the swaps market weighed on flat prices in-line with a wider drop in middle distillates, with the flat price marked $1.19/b lower day-on-day at $117.14/b. The spot crack to Brent was still able to continue its recovery, however, as it posted a third consecutive day of gains as it was up $1.32/b gain at +$27.57/b. Stocks data from Singapore showed middle distillate inventories down by 120,000 barrels to a two-week low of 8.4 million barrels.

A diesel 10ppm cargo changed hands during Asian trading hours on a Shell offer booked by Vitol at a $0.70/b FOB Singapore loading 13-17 October pricing over 1H October paper. The 10ppm cash differential was assessed just $0.02/b lower day-on-day at a $1.62/b premium to the curve as a result, which left the outright $0.94/b lower at $125.44/b. The spread to higher sulfur grades continued to narrow amid firm demand, with 0.25%S bid up to a $1.40/b discount to swaps and 500ppm raised to a $0.60/b discount thanks to Vitol’s bidding. That left the 500ppm outright up $0.32/b at $123.22/b and 0.25% down $0.12/b at $122.42/b. Refining margins were up across the gasoil market, with 10ppm gaining $1.57/b to +$35.87/b.

A wide bid-ask spread persisted in the marine fuel 0.5% sulfur market, although buying interest from BP lifted the back end of the physical window. That added $0.95/mt to Quantum’s cash assessment and lifted the differential to $13.64/mt FOB Singapore. Moves in paper left the assessment down $7.41/mt from Wednesday at $667.74/mt, with the spot crack to Brent up $1.43/b at $7.20/b. That came as weekly stocks data from Singapore showed residual fuel inventories jumping 21% last week to a seven-month high of 23.4 million barrels. For high sulfur fuel oil, markets were quiet with only a few offers from the sell-side of the market seen. Cash differentials were steady as the 380 CST market was up a slim $0.14/mt at $380.14/mt.