Asia oil/products: Crude edges up, distillate margins creep back up

Quantum Commodity Intelligence - Asian crude oil markets returned from the Singapore holiday slightly firmer but still close to recent five-month lows, while distillate cracks edged higher after their recent downwards run.

Dubai cash for October delivery was assessed at $94.86/b for 10 August (1630 Singapore time), up $0.60/b from Monday's Asia close, while DME Oman futures, which traded Tuesday, were up $0.71/b on the day at $95.84/b for the Oct22 contract.

The near $1/b premium for Oman futures versus cash Dubai means that Oman is unlikely to set the Dubai assessment, at least in the short term, leaving Upper Zakum and Al Shaheen as the most probable grades to be nominated following partials convergence this month.

Qatar is expected to issue a tender for three October-loading Al Shaheen cargoes, which will be viewed as a gauge of market demand. Traders valued the grade at around $6/b over the corresponding Dubai swap, although keen buying interest for the tender cargoes could lift premiums higher.

Physical demand for the busy Q4 refining period was expected to be healthy, with Asian refiners reported this week to be taking full allocations of September-loading Saudi barrels.

ICE Brent futures for Oct22 were valued at $95.68/b at the Singapore 1630 timestamp, up $0.53/b from Monday's Asian close. The October Brent/Dubai cash spread was slightly narrower at $0.82/b, while the October Brent/Dubai EFS eased slightly versus Monday to $6.66/b.

Products

Naphtha cash activity continued to pick up, with bids and offers seen for cargoes loading 1H and 2H October without trading. Those levels were not enough to change where Quantum's prevailing cash value sat, however, with clear structure in the paper market leaving the flat price marked $11/mt lower at $702.25/mt CFR Japan, with the spot crack to Brent down $19.06/mt to +$4.95/mt.

Gasoline physical markets were characterised by a wide bid-ask spread on Wednesday, with no cargoes heard trading hands through the day. Moves in the swaps market meant the 92 RON outright was up $1.63/b at $104.12/b, with 95 RON up $1.40/b to $107.62/b, and 97 RON up $1.35/b at $109.57/b. Cracks crept higher as 92 RON gained $0.53/b to +$8.99/b.

A jet cash indication was heard in the market for the first time in several weeks, with Mercuria bidding for a cargo delivered 25-30 days ahead at a $1.20/b FOB Singapore discount to swaps. That was well off where Quantum saw prevailing value, however, with the cash differential steady as moves in the paper market raised the outright $5.56/b to $121.41/b. The crack to Brent rebounded $4.46/b to +$26.28/b.

The 10ppm diesel market was strongly offered on Wednesday, which flattened the physical curve. A sole bid from Totsa for loading 25-30 days ahead limited the fall in the cash differential to $0.38/b, with Quantum assessing value at $0.40/b. Swaps went in the other direction, however, and that translated into an outright up $4.35/b at $128.03/b FOB Singapore. The spot crack to Brent was up $3.25/b at +$32.90/b.

Marine fuel 0.5% sulfur cash differentials continued to fall as regional supply picks up, with an aggressive offer from Trafigura at a $14/mt FOB Singapore premium to nearby swaps for loading 15-20 days ahead weighing on the market. That took $1.79/mt from Quantum's cash differential, which was marked at a fresh low of $16.08/mt. Despite that, the flat price was almost unchanged from Monday, up just $0.36/mt to $690.90/mt, with the spot crack to Brent falling $1/b to +$5/b.

High sulfur fuel oil saw a wide bid-ask spread on both viscosities in Asia on Wednesday, with cash differential marked steady from Monday's early close. Moves in the swaps market helped eke out some modest gains for HSFO flat prices, with 180 CST up $9.88/mt at $495.13/mt FOB Singapore and 380 CST up $6.83/mt at $470.41/mt.