Asia oil/products: Crude closes higher, fresh lows for gasoline crack

Quantum Commodity Intelligence - Middle East crude prices were slightly higher Friday to end the week on a positive note and ate further into gasoline cracks, which are now at their lowest since August 2020.

Dubai cash for September delivery was assessed at $102.69/b for 22 July (1630 Singapore time), up $0.69/b from the previous session, while DME Oman futures for the Sept22 contract were down $0.70/b at $102.86/b.

Partials activity continued to pick up with two more convergences Friday, including Total nominating Oman to Mercuria and Exxon declaring Al-Shaheen to Trafigura. This valued both grades at $9.35/b on a Dubai swaps basis, while Upper Zakum was also pegged at the same value.

ICE Brent futures for Sep22 were assessed at $103.93/b on the Singapore 1630 close, up $0.23/b from the previous Asian close. The September Brent/Dubai cash spread narrowed $0.46/b to $1.24/b, while the September Brent/Dubai EFS narrowed around $0.44/b to $10.59/b, a one-week low.

Products

Both sides of the naphtha cash market were seen for similar shipment dates for the first time in several weeks, with BP and Marubeni forming a tight $764/mt v $767/mt CFR Japan spread for 1H October without trading. That confirmed value sat where Quantum had assessed previously, with the paper market adding $5/mt to Thursday's assessment to take the outright to $766.50/mt. The spot crack to Brent was up another $3.17/mt to +$27.64/mt.

Gasoline margins continued to fall amid rising supply, high stocks, and continued questions about demand growth. A thinly bid market meant no change in where Quantum saw value in the cash market, with moves in the paper leaving gasoline cargo prices continuing to fall. Moves in the swaps market left the 92 RON price assessed $3.24/b lower at a fresh six-month low of $103.32/b FOB Singapore. That left the spot crack to Brent at a fresh low, falling $3.49/b to just +$2.52/b.

Thin activity continued to define the jet cash market, with a sole seller in Unipec finding no buy-side interest at a level that was still well above where Quantum saw the prevailing value. That meant moves in the paper market left the cargo flat price $0.15/b lower than Thursday at $128.67/b FOB Singapore, with the spot crack to Brent down $0.40/b at +$27.87/b.

A diesel trade was booked at the front end of the 10ppm cash window between BP and Total at a $2/mt FOB Singapore premium to swaps, which was taken as value and lifted the cash assessment $0.20/b with the structure steady. That left the flat price up $0.54/b at $136.69/b, with the crack eking out a small $0.29/b rise from Thursday's two-month low to price at +$35.89/b versus spot Brent.

Marine fuel 0.5% sulfur cracks continued to slide hard into the weekend, with the spot margin to Brent falling another $4.49/b to a two-month low of +$11.99/b. Only Vitol and Trafigura were in the cash market Friday, bidding for different dates with a wide bid-ask spread even when market the cash structure was considered. Trafigura's unhit back end offers weighed heavily on the cash differential, which fell $6.50/mt to $60/mt FOB Singapore and left the flat price down $29.25/mt at a three-month low of $778.25/mt.

High sulfur fuel oil cash differentials continued to rise amid recovering demand, with 180 CST bid up at the front of the physical market again to creep $0.75/mt higher to a $0.75/mt FOB Singapore discount to nearby swaps. Bids along the 380 CST curve at a $3/mt premium to swaps confirmed the physical assessment was unchanged. That left 180 CST down $8.25/mt at $476/mt and 380 CST down $5/mt at $448.25/mt.