Murban crude rallies on higher gasoline, distillate cracks, firm EFS

27 Oct 2021

Quantum Commodity Intelligence - Abu Dhabi's flagship Murban crude has surged to its highest level versus Brent and Middle East sour grades since the contract was launched on the IFAD exchange in March this year, as Asian refiners look to boost output of gasoline and distillates.

The light sweet Murban grade was trading at a discount of $0.15/b under North Sea Brent Wednesday, compared to around -$1.50/b at the start of the month and an average of -$1.40/b in September.

Although similar to North Sea grades, Murban typically faces stiff competition from lower sulfur arbitrage barrels from West Africa, the US, and the North Sea into Asia.

But with expensive arbitrage economics, refiners have turned to the Middle East to bolster light crude supplies.

The ICE Murban minute marker for December settled at $85.22/b 1630 Singapore time on Wednesday, compared to the Brent minute marker at $85.37/b, according to ICE exchange data.

At around 40.0 degrees API gravity and 0.7% sulfur, the grade yields a high percentage of gasoline and distillates, which have rocketed above pre-pandemic levels this month in terms of crack values against Brent.

Benchmark 92 RON gasoline surged past $100/b in Singapore on Monday, lifting the premium over Brent to around $18/b, the highest since 2017. 

Gasoil 10ppm cracks in Singapore have averaged around $12/b this month, compared to $8/b in September, which in turn has also helped boost jet cracks to double-digit premiums over Brent, according to Quantum data.

Murban has also strengthened against Middle East sour crude benchmarks Dubai and Oman, trading around $1.70/b over the medium sour grades, according to Quantum data, having averaged around $0.80/b in September.

Heavier barrels have also been hit by lower fuel oil cracks over the last two weeks, with HSFO cracks sinking to around $11/b under Brent.

The Brent/Dubai EFS (exchange of futures for swap), a key metric in comparing Dubai-related crude oil versus grades pricing against the North Sea Brent benchmark, surged to three-year highs this week, primarily on the wider Dubai structure.

Quantum assessed the front-month December EFS on Wednesday at $4.50/b, while the January EFS was heard trading around $4.85/b.

A wider spread typically makes Middle East grades more attractive to Asian refiners. At the same time, Dated Brent-related crudes, such as those from the North Sea, Americas or West Africa, become more expensive.

Russian low-sulfur crudes Sokol and ESPO also surged higher this month, as refiners chased distillate-rich barrels.

The UAE's Abu Dhabi National Oil Co (ADNOC) plans to produce 1.19 million bpd from its Murban oil field in November, according to its crude availability forecast released Wednesday.