Asia oil/products: EFS trades above $4/b, jet cracks dip to 2-month low

21 Jun 2021

London (Quantum Commodity Intelligence) – Middle East crude prices rebounded Monday as additional Iranian barrels looks set to be kept off the market for the third quarter, while surging Brent lifted Brent/Dubai spreads.

Dubai cash for August delivery was assessed at $71.75/b (1630 Singapore time), up $0.82/b from Friday’s Singapore close, while DME Oman futures for August settled $71.96/b at the Asia close, up $0.95/b.

Negotiators in Vienna failed to find a breakthrough in the latest round of nuclear talks, even though progress was made, and the delay removes the immediate threat of up to an additional 1.5 million bpd of Iranian oil hitting the market.

Cash Brent (BFOE) for August was assessed at $73.77/b, up $0.96/b from Friday’s Asian close, as the Brent/Dubai spread widened out to over $2/b.

Meanwhile, the Brent/Dubai EFS traded above $4/barrel for the first time in over two years, lifting premiums for both Asian grades and imports.

However, a sharp cut in import quotas for Chinese independent refiners is expected to dampen spot demand from the world’s largest importer of crude oil.

Products

Gasoline cracks firmed $0.20/b on the day as higher swaps outrun firmer crude. Spot delivered cracks were $5.31/b FOB Singapore, up $0.23/b, with the July paper crack rising $0.29/b to $6.24/b. The prompt physical flat price was assessed at $79.08/b FOB Singapore, up $1.19/b) on thin trade.

Jet kero spot cracks took a tumble on Monday, although no deals were heard. Swaps were lower versus crude nearby and stable further out, indicating crude prices are front running passenger demand for flights. The cash differential was marked at $0.30/b under swaps and the crack sank to $2.66/b – down $0.05/b and at a near two month low. Flat prices were pegged at $76.43/b FOB Singapore, up $0.91/b on the day.

10ppm diesel cash differentials and cracks were lower on Monday, as tempered demand in Asia weighed on sentiment, while Brent remained firm. One trade for 10ppm was heard at a $0.10/b discount to swaps, leaving the flat price at $79/b FOB Singapore, up $0.57/b on the day. However, cracks were down $0.39/b at $5.23/b in line with lower swaps.

Fuel oil cracks dipped on Monday as higher crude oil pressured both high sulfur and lower sulfur refining margins. Sentiment was weaker, largely due to firmer crude, with only one trade reported at -$1.25/mt for 180 cst 3.5%. 380 cst 3.5% was marked at $404.25/mt FOB Singapore, up $2.75/mt on the day. Marine fuel 0.5% was assessed at $520.5/mt, up $3.00/mt on the day. Cracks for both were $0.45-0.53/b weaker on the day.

Naphtha margins also lost ground slightly, with the front-month July swap crack shedding $0.09/b to -$1.58/b. Flat prices in $/mt were up all along the curve tracking higher crude however, with gains of at $7.25-$8/mt for each of the next 6 months.