Asia oil/products: Crude eases further, Nov product paper trade rises

Quantum Commodity Intelligence – Middle East crude prices Tuesday retreated for the fourth consecutive session Tuesday, although the losses were relatively modest by recent standards, while interest in the products market shifted to the Oct/Nov spread heading into the end of the month.

Dubai cash for November delivery was assessed at $84.20/b for 27 September (1630 Singapore time), $3.95/b lower on the day, taking the four-day losses to almost 8%, while DME Oman futures were down $0.22/b at $84.24/b for the Nov22 contract.

Another active Dubai partials window saw three more convergences, with Vitol receiving two Upper Zakum cargoes and one Al Shaheen.

But the soft finish to the month saw a further narrowing in the structure as the key M1/M3 spread (Nov22/Jan23) sunk below $3.95/b, which sources say could moderate any potential rise in Saudi OSPs.

Medium sour grades, including Oman, Upper Zakum and Al Shaheen, were also valued at below Dubai swaps +$4/b for the first time in a month.

ICE Brent futures for Nov22 were valued at $85.42/b at 1630 Singapore, up $0.26/b from the previous Asia close lifting the Nov22 Brent/Dubai spread to a monthly high of +$1.22/b. The Nov22 EFS rebounded around $0.50 to $5.15/b at the Asian market-on-close.

Products

Naphtha saw the 2H November laycan bid up to $636/mt CFR Japan by BP through the trading window although that remained below where prevailing value in the market had sat from Monday. As a result, moves in the paper market left the flat price down $5.75/mt at $641/mt as the spot crack to Brent down for the first time in nine sessions, slipping $6.78/mt to +$22.27/mt.

Gasoline paper markets saw plenty of interest in the 92 RON Oct/Nov spread, with Hotei booking at $2/b from PetroChina, SK Energy, and Trafigura. Cash activity was thinner, but offers from Vitol along the strip weighed on the market and left the flat price up $2.98/b from Monday at $87.50/b. The spot crack versus Brent continued to claw ground back into positive territory and was up $2.84/b at +$3.09/b.

Jet activity was limited with liquidity thinner as much of the trade gathers in Singapore for APPEC. While there were few fresh indications for the physical market, the Oct/Nov spread traded several times with $1.40/b backwardation. That left the outright up just $0.05/b day-on-day at $108.30/b, with the spot crack to Brent slipping $0.09/b to +$23.89/b.

Diesel activity remained focused on higher sulfur grades, with the sole physical deal heard through Asian trading hours on Tuesday was a 500ppm cargo that Chevron sold to Vitol at a $0.40/b FOB Singapore premium to the curve for 12-16 October delivery. Despite that, Quantum's 500ppm cash differential held steady at a $0.29/b FOB Singapore discount to swaps as a bid from Vitol at a $0.30/b discount to swaps confirmed existing value. With Unipec the sole seller in another quiet 10ppm window, Quantum's cash differential was held at a $1.62/b premium to swaps and left the flat price up a slim $0.04/b at $117.24/b. The spot crack for 10pmm to Brent slipped $0.10/b to +$32.83/b.

BP was a lone bidder in the marine fuel 0.5% sulfur cash market, lifting cargoes for 15-19 October to a $16/mt FOB Singapore premium to the curve without finding any sell-side interest. That added $1.66/mt to Quantum's cash differential, which was assessed at $15.30/mt. With that rise and moves in the swaps market, the flat price was up $2.03/mt at $625.83/mt and left the spot crack to Brent broadly steady as it ticked $0.15/b higher to +$6.29/b.

High sulfur fuel oil cash differentials were marked steady day-on-day in a low liquidity session. Swaps were more active, with Vitol an enthusiastic seller of October paper to Dare, DV, Engie, Kershner, and Onyx at $354.75/mt. Meanwhile, Vitol picked up November paper from Prime at $357/mt. Those moves underpinned changes to the HSFO market, with the 380 CST outright falling $6.90/mt day-on-day to $351.08/mt.