Asia oil/products: Crude down 3.5%, products mixed amid tighter curbs
Quantum Commodity Intelligence – Middle East crude prices slumped by around 3.5% Wednesday, following the sharp sell-off in western benchmarks the previous day, while cracks were mixed.
Dubai cash for September delivery was assessed $73.25/b on July 7 (1630 Singapore time), down $2.60/b from Tuesday, while DME Oman futures for September settled $73.42/b at the Asia close, down $2.67/b.
However, the Dubai structure held firm with Sep/Oct close to $1.50/b and Oct/Nov at more than $1/b, the strongest M1-M3 spread since December 2019, according to brokers.
With no breakthrough on the impasse between Saudi and UAE over the latter's baseline production level, the current OPEC+ deal remains intact meaning the proposed 400,000 bpd increase in August.
This is expected to keep Asian sour crude markets tight heading into the latter part of the year.
Cash Brent (BFOE) for August was assessed at $75.03/b, down $2.66/b from Tuesday's Asian close, while the Brent/Dubai spread narrowed slightly to +$1.78/b.
Products
Naphtha cracks eased for the first session in seven as crude oil prices fell. Quantum's CIF Japan quote fell almost $27/mt to $678.75/mt, leaving the crack at $128/mt. Bids and offers were heard at $680/mt for 1H September loading versus $681.50/mt, with a backwardation of $4-5/mt for 2H September. Light end stocks in Fujairah were down 11% on the week.
Gasoline cracks fell for the first session in six, albeit marginally, amid good spot liquidity that saw a handful of cargoes trade at $83.90/b FOB Singapore. Flat prices were assessed at that level leaving cracks at $8.87/b, down $0.40/b on the day. In addition, one RON 95 deal was heard at $85.98/b FOB Singapore.
Jet fuel cash differentials were assessed static at $0.40/b below the underlying swaps curve at a flat price of $77.39 FOB Singapore. Cracks rose marginally, but they remained holed in a $2-2.50/b range and have been for the past week. No deals were reported and there is lingering concern about travel in the Asian region, particularly given that South Korea is introducing fresh curbs on movement, Vietnam banned dozens of flights and there were reports that Japan is considering banning spectators for the Olympics.
One 10ppm diesel deal was heard at a cash differential of $0.05/b below the underlying swaps curve. That gave a flat price of $80.14/b and a crack of $5.11/b, flat on the day. Like jet, the diesel 10ppm crack remains in a tight band – this time of $5-5.50/b FOB Singapore.
Fuel oil cracks were mixed on the day, as cash differentials were assessed largely static and swaps curves moved largely alongside crude. Flat prices were assessed at $408.25/mt for 380cst 3.5% sulfur, $418/mt for 180 cst FOB Singapore and $533/mt for 0.5% Marine fuel FOB Singapore. Higher sulfur cracks were down a nudge and marine fuel up slightly. Fuel oil stocks in Fujairah hit a three-month low earlier, although they remain at similar levels to the 2021 average.