Asia oil/products: Spot crude premiums firmer, distillate cracks slide

12 May 2022

Quantum Commodity Intelligence - Middle East crude oil prices were little changed Thursday but premiums for physical barrels continued the firmer trend, while distillate cracks came under heavy pressure from bearish stocks data in the US and Singapore.

Dubai cash for July delivery was assessed at $102.84/b May 12 (1630 Singapore time), down $0.05/b from the previous Asia close, while July DME Oman futures were up $0.01/b at $102.94/b.

Saudi Aramco reportedly allocated full term volumes to customers in Asia for June and while largely expected, underscored the firmer tone on spot cargoes. Flagship medium sour barrels, including Upper Zakum and Oman, were valued at $5.35-$5.40/b over the July Dubai swap, the highest in over a month.

Likewise, premiums for light sweet Murban were quoted around Dubai swaps +$8/b, although potential buyers baulked at this level, with distillate cracks in retreat Thursday.

ICE Brent futures for Jul22 were valued at $105.44/b on the Singapore 1630 close, down $0.24/b on the previous Asian close, further narrowing the July Brent/Dubai cash spread to $2.60/b. The July Brent/Dubai EFS was steady at $7.93/b.


Naphtha cash trading on Thursday saw Glencore sell a cargo for 1H July at $915/mt CIF Japan, a level that lifted the cash structure $2/mt from with no other deals booked as Marubeni offered down and struggled to find buying interest. That left the outright price $4/mt lower from Wednesday at $912/mt, with the crack largely steady as it eased off $1.78/mt to +$143.16/mt.

Gasoline cracks continued to climb Thursday as data from the US and Singapore showed draws in stocks. In the cash market, Vitol was bidding for 92 RON at the back end of the laycan at $131.80/b FOB Singapore. That lifted the back end of the cash curve and added $0.23/b to Quantum’s differential, which was put at a $2.37/b premium to nearby swaps. The 92 RON flat price was marked $1.31/b higher at $132.63/b as the spot crack to Brent was up $1.60/b at a one-week high of $27.74/b. The 95 RON price was marked in-line with the traded value, gaining $1.43/b to $136.40/b as the spot crack was up $1.72/b to +$31.51/b. In Singapore, stocks data a 257,000-barrel drop in light ends this week to 14.6 million barrels. That followed a bigger-than-expected fall in EIA data in the US, which showed stocks down 3.6 million barrels to 225 million barrels.

Jet saw aggressive offering in the cash market from Shell and China Aviation Oil as data from Singapore and the US showed big builds in distillates. The cash differential saw $2.22/b knocked off by those offers to be left at a $1.98/b FOB Singapore premium to the curve. The outright price fell hard, slipping $7.04/b amid wider oil market volatility to $136.67/b, while the spot crack to Brent was down $6.75/b to a two-week low of +$31.78/b. Weekly stock data from Singapore showed distillates up by 1.4 million barrels last week to 7.4 million barrels as stocks rebounded from multi-year lows reached last week. In the US, overnight data showed a 2.1-million-barrel increase in jet stocks to 38 million barrels.

Diesel buyers again dominated the cash window, but a sole $7/b FOB Singapore mid-window offer from BP was most aggressive, lowering the cash curve. That left the cash price assessed $0.98/b lower than Wednesday at a $6.51/b premium to swaps. The 10ppm outright price was down $5/b to $149.90/b and the spot crack versus Brent was $4.71/b lower at +$45.01/b. For 0.25%S, a firm bid from Vitol in the middle of the cash window narrowed the spread to 10ppm as the spot cash price was assessed $3.50/b lower from Wednesday at $141.20/b.

Marine fuel 0.5% sulfur again saw only sellers in the market, with offers at the front and middle of the cash window at $18/mt FOB Singapore pressuring the cash differential $0.69/b lower to $17.07/b. The outright was marked a slim $0.25/mt higher at $799/mt, while the spot crack to Brent was up $0.33/b at $10.91/b. That came as weekly data from Singapore showed residual stocks falling by just over 3 million barrels, leaving stocks at the lowest since July 2019 at 17.5 million barrels.

High sulfur fuel oil continued to come under pressure in the cash market, with sellers offering cargoes down and finding some buying interest. Two 380 CST deals were booked for loading 25-30 days ahead, one at $587/mt FOB and another at a $2.50/mt premium to the curve. With the latter falling before the 1630 Singapore cut-off time, it was taken as value and meant the differential was assessed nearly $4/mt lower at $2.25/mt. The spot price slipped $5.25/mt to $587.75/mt.