Asia oil/products: Markets hit pandemic highs on Russia invasion

24 Feb 2022

Quantum Commodity Intelligence – Asian crude prices rocketed by over 5% in response to Russia’s invasion of Ukraine, while refined products broadly tracked the move with only naphtha showing real tightness.

Dubai cash for April delivery was assessed at $98.60/b February 24 (1630 Singapore time), up $5/b from the previous Asia close, while April DME Oman futures were up $4.06/b at $97.69/b.

But Dubai was left trailing by Brent with April Cash BFO assessed as $103.25/b at 1630 Singapore time, up $6.37/b on the previous-Asia cash close, lifting the Brent/Dubai spread to fresh highs.

The April cash Brent/Dubai spread was assessed at a multi-year high of $4.65/b, up $1.37/b on the day, while the front-line April EFS held was up $1.31/b at $8.79/b.

The EFS was at the highest level since the mid-2000s when the Brent/Dubai cash spread traded at double-digits for a brief period.

However, the front-month Apr/May Dubai cash spread narrowed sharply to $1.08/b, indicating a relative weak expiry with Monday the last trading day of February.

The M1/M3 (Apr22/Jun22) Dubai held above +$4/b, while the one-year forward curve spread surged $14/b.

Spot activity was largely sidelined amid flat price volatility, but SOMO issued a tender for 2 million barrels of Basrah Medium for April loading.


Naphtha cracks hit fresh pandemic highs on Thursday, as physical cargo prices soared past $900/mt and were assessed at $918/mt CIF for cargoes delivered into Japan for H2 April/H1 May. The crack rose to $185/mt, up $7/mt on the day, a move that will increase gasoline and plastics prices over the longer term. Paper cracks were also $5-7/mt higher. The rise was fuelled by the expectation of tighter supply in Europe, with the east-west average spread for the next three months at close to zero. One deal was heard at $812/mt CIF Japan.

Gasoline cracks dipped and bids and offers seen were relatively wide. The 92 RON assessment reflecting cargoes loading within 15-30 days ahead were assessed at $114.23/b FOB Singapore, up $5.07/b on the day, but lagging crude. One deal was heard at $114.60/b for loading 26-31 days ahead. The market structure tightened, however, with time spreads now trading back above $2/b to reflect the tighter crude market.

Jet fuel prices rose broadly in line with crude amid thin liquidity and a swaps market that matched the rise in Brent. Cargoes loading out of Singapore were assessed at $111.43/b, up $5.76/b on the day with nearby swaps moving up by a similar amount. That left a crack of $11.42/b, up just $0.05/b on the day. Only offers were seen in the market at $1/b above prevailing value. The market structure, however, steepened to reflect the wider backwardation in crude.

Like all other products, 10ppm cargoes rose to a pandemic high as swaps tracked crude higher with Quantum’s assessment up $5.76/b to $116.60/b on an unchanged cash differential of $1.89/b. Cracks were up just $0.05/b to $16.30/b and the EFS widened $3/mt to -$25/mt, widening an arb to Europe.

Fuel oil cargoes breached the $750/mt level on Thursday for 0.5% sulfur, up a chunky $34.25/mt on the day on underlying crude. Cracks fell to a two-week low as swaps fell versus crude. That’s despite stocks in Singapore falling to a one-month low. Physical trade was muted and cash differentials were pegged at $16.83/mt to swaps, in between bids and offers of $15-17/mt.