Asia crude/products: Dubai structure firms to one-year high, gasoline cracks slip
London (Quantum Commodity Intelligence) – Middle East crude oil prices consolidated recent gains Wednesday, as the market increasingly discarded the likelihood of Iranian barrels returning in the third quarter.
Dubai cash for August delivery was assessed at $69.17/b on June 2 (1630 Singapore time), up $0.07/b from Tuesday's Singapore close, while DME Oman futures for August settled $69.46/b at the Asia close, up 0.31/b.
The Middle East July market is looking firm for August, said traders, as the Aug/Sept spread widened to $1/b – the highest in a year - and backwardation along the forward curve strengthened.
Premiums for medium sour grades such as Oman or Upper Zakum were quoted higher at Dubai swaps +$1.80-$1.85/b, while the light sweet Murban was valued at Dubai swaps +$2.30-$2.40/b.
In the East Asian market, light sweet Sokol was heard trading at premium in excess of Dubai swaps +$3.00/b, as refiners chase lighter barrels in anticipation of improved demand for transportation fuels later in the year, particularly gasoline and jet.
Cash Brent (BFOE) for August was assessed at $70.88/b, up $0.16/b from the Tuesday's Asian close, while August Brent/Dubai was little changed at $1.71/b.
Products
Higher sulfur fuel oil cracks were firmer on the Iranian pessimism, marine fuel 0.5% fell after Tuesday's spike, distillates were flat and light ends were mixed.
In light ends, a big draw in Japanese stocks of naphtha has left front month paper cracks at over $100/mt, near to their highest level in a month. No physical deals were reported and premiums over paper were kept steady. The flat price was assessed at $627.50/mt.
Gasoline spot cracks slipped for the sixth successive day, with covid outbreaks across Southeast Asia hitting the nearby cracks, while further out cracks firmed. Two spot deals were heard at $75.40/b, keeping flat prices stable on the day and pushing cash differentials deeper into a discount.
Distillates were broadly steady, no deals were heard and swaps matched crude's slight move north. Cash differentials were unchanged for both jet and diesel 10ppm.
Marine fuel 0.5% cracks fell back after Tuesday's big move north. No physical deals were heard and the swaps market was down versus a marginally firmer crude complex.
With cash differentials pegged at -$2/mt, that pushed cracks down to $3.79/mt, down $0.60/b on the day, but 40% higher than May's average still.
Higher sulfur cracks were around $0.20-40/b firmer across the curve. Spot cracks were marked at -$9.07/b, up $0.23/b on the day. The cash differential was pegged at -$2/mt, reflecting a structurally weak market, but one that is firming due to a dearth of Iranian supply.
