Asia crude prices rebound, distillate cracks surge to pre-pandemic levels
London (Quantum Commodity Intelligence) – Crude oil prices rebounded in the early-Singapore close Wednesday, shrugging off data from India showing a steep decline in oil consumption during April.
Data from the country's Petroleum Planning and Analysis Cell said diesel demand fell by 8% during April compared with March – a fall equivalent to 565,000 mt or 140,000 b/d – while gasoline demand fell by 15% compared to a month earlier – a fall of 355,471 mt or 100,000 b/d.
Demand in May is set to slump further as the coronavirus crisis spreads to rural areas.
Dubai cash for July delivery was assessed at $66.52/b on May 12 (12.30 Singapore time), up $1.02/b from Tuesday's Singapore close, while DME Oman futures for July settled $66.73/b at the Asia close, up $1.10/b on the day.
Cargoes of Upper Zakum and Al Shaheen were delivered against Dubai following convergence – valuing the Abu Dhabi and Qatari grades at parity to cash Dubai. Cash Oman was assessed at a small premium to Dubai.
Cash Brent (BFOE) for July was assessed at $68.60/b, up $1.01/b versus Tuesday's Singapore close.
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Naphtha June cracks rebounded on Wednesday, rising to $97.36/b to exceed the month-to-date average of $97.08/mt. No spot deals were heard in abbreviated trade in Singapore. Cracks were this high last on Monday, although the backwardation on swaps has narrowed between June and July by $1/mt, indicating a relatively weaker front month.
Gasoline cracks continued to slide on Wednesday, with June versus August cash Brent at $6.22/b, down $0.17/b on the day, a two-week low and half a dollar off the $6.77/b average so far this month. Two deals were heard at a flat price of $75-75.10/b FOB Singapore for 92 RON spec. The June/July crack timespread remains in slight backwardation, indicating a marginally firmer nearby market, although the complex remains weak on southeast Asian demand fears.
Jet kero fuel cracks hit a 14-month high of $4.21/b for the front month FOB Singapore, despite lower stocks in Fujairah. The rise continues to be underpinned by the expectation of a European and US demand recovery. That was supported by US passenger data, with five-day rolling averages indicating the highest demand for air tickets since March 2020. East-west spreads, however, were unchanged. Cash differentials were marked at $0.10/b on reports of one deal at that level.
Diesel followed a similar pattern, with front month cracks versus August cash Brent rising to their highest since the outbreak of the pandemic at $5.87/b. The June crack is 20% higher than the monthly average so far. Three deals were heard at levels around -$0.10/b.
Fuel oil cracks rebounded slightly on Wednesday, reversing the day's earlier losses, with HSFO 380cst -$8.18/b and marine fuel at $3.75/b. The cracks remain $0.20-0.50/b below where the month to date average. Deals were heard pegging spot value at -$1/mt to the underlying swaps curve.