Asia oil markets ease on demand fears, spot gasoil cracks firm on flurry of deals
London, UAE (Quantum Commodity Intelligence) – Benchmark Middle East crude oil prices slipped to two-week lows Tuesday, following the previous day's European and U.S. sell offs which wiped over 4% from oil markets.
Dubai cash for June delivery was assessed at $61.38/b on April 6 (16.30 Singapore time), down $0.57/b from Monday's Singapore close, while DME Oman futures for June settled $61.41/b at the Asian close, down $0.66/b.
Traders expressed concerns that global demand would fail to keep pace with increased production hikes announced by the OPEC+ last week.
The producer group agreed to start softening production curbs of 350,000 barrels per day (bpd) in May, 350,000 bpd in June, and a further 400,000 bpd for July.
OPEC+ had cut output by nearly 7 million bpd in response the COVID-19, while Saudi Arabia made an extra 1 million bpd voluntary output cut.
Products
The fall in crude was not replicated in the middle distillate and light end cuts of the barrel, with physical cracks versus cash Brent rising sharply.
Strong physical demand for nearby volumes for diesel 10ppm saw spot cracks versus cash Brent rally hard in the past two days, rising from $2.35/b on Thursday to $3.96/b today.
Five deals were reported in the physical market for end-month loading pushing the differentials from -$0.30 to parity with underlying swaps.
A far larger move was seen in the naphtha market with one physical deal reported at a flat price of $569/mt and pushing the crack up to $0.63/b from just $0.13/b on Monday. The trade was marked $4/mt above where the front month swaps were marked.
No physical deals were heard and the discount to the underlying swap was held at -$0.60/b. The April swap was pegged at $64.35/b, down just $0.10/b on the day, with a $0.35/b contango to May.
The crack firmed $0.40/b to $0.64/b.
For gasoline, two parcels of 50,000 barrels were heard traded in the FOB Singapore market, with 92 RON trading at $70.38b for end month delivery and 95 RON changing hands at $72.60/b for later loading dates.
High sulfur fuel oil values moved down in line with crude, while the 0.5% marine fuel held firm with distillates.
Physical 180 cst traded at a $1.50/b premium to the underlying swap leaving flat prices at $363.50/mt and $355.25/mt for 380cstm, which was marked at flat to the curve.
While high sulfur fell $5-6/mt on the day down the curve, marine fuel was just $2.75/mt lower at $465.75/mt for physical.
In jet kero, no physical deals were heard and the discount to the underlying swap was held at -$0.60/b.
The April swap was pegged at $64.35/b, down just $0.10/b on the day, with a $0.35/b contango to May. The crack firmed $0.40/b to $0.64/b.