Asia oil/products: Crude edges up, distillates ease after rally
Quantum Commodity Intelligence – Asian crude oil prices rebounded Friday in line with the Brent recovery and this month's improved outlook for products, while distillate cracks eased.
Dubai cash for December delivery was assessed at $92.10/b for 14 October (1630 Singapore time), up $0.92/b on the day, while the Dec22 DME Oman futures contract was up $0.92/b at $92.06/b.
Dubai partials for Dec22 were well traded at $92.10/b, according to brokers, while medium sour flagship grades including Oman, Upper Zakum and Al Shaheen were heard talked at around Dubai swaps +$5/b.
Traders said spot buying interest for December barrels has been sluggish so far this month amid recent price volatility, although the recent improvement in refining margins was expected to lift crude buying in the second half of October. Qatar's Al Shaheen tender will be awarded early next week, with premiums based on current market structure seen at around Dubai +$5/b.
ICE Brent futures for Dec22 were valued at $93.97/b at 1630pm Singapore, up $1/b from the previous Asia close. The Dec22 Brent/Dubai spread widened to a fresh two-month high of $1.87/b, while the Dec22 EFS edged up to $6.78/b on the Asian market-on-close.
Products
Naphtha delivered into Japan was assessed broadly steady on the day versus a firmer crude complex and the backwardation eased, with physical assessed at $23.50/mt over front month swaps, down from $25.50/mt on Thursday. The market looks weak. Cargoes were offered down to $673/mt on 2H November laycan and $670/mt on 2H December. Cracks to Brent eased $0.88/b on the day to -$18.05/b.
Gasoline firmed and cracks ended the week flat to crude, with refining margins under pressure from subdued regional demand. Unipec bid up to $92.10/b for 92 RON cargoes, and were offered down to $91.90/b by Vitol, albeit for different loading dates. No trades were agreed and the cash differential rose $0.07/b to $0.71/b. Cargoes were assessed at $91.91/b, up $0.93/b on the day. Unipec were also active on 95 RON cargoes and bid up to $95.10/b on various loading dates. Shell bought a non-Russian origin 95 RON cargo at $97.80/b from Petrochina.
Jet saw another quiet cash session to finish the week, with no fresh indications heard from either side of the market heading into the weekend. Paper trade was busier, with the little action there focused on trading the Oct/Nov spread at $1.80/b and the November regrade at $8.15/b. With that, Quantum's flat price was up $0.78/b at $127.38/b as the spot crack to Brent was down $0.16/b at +$34.15/b.
Diesel trade was muted after a busy session in Europe last night, with only Vitol in the market bidding up the 500ppm cargo market and finding no sellers. Lifting the 3-7 November laycan to $1/b FOB Straits over the paper curve, that was still not enough to adjust Quantum's cash differential. Moves in the 10ppm paper market shifted focus to the Nov/Dec spread, with Gunvor selling to DARE repeatedly around $5.60/b. With that, the flat price was marked up $0.28/b at $140.50/b as the spot crack to Brent fell $0.66/b to +$47.28/b.
Marine fuel 0.5% sulfur had a tight bid-ask spread was seen along the cash curve, with a sole cargo booked on an offer at a $19/mt FOB Straits premium to swaps as Gunvor bought from Shell for delivery 3-7 November. Taken as value, that shaved $0.17/mt from Quantum's cash assessment and left the outright up $13.23/mt at $696.31/mt. The spot crack was up $0.97/b at +$7.69/b. In a quiet day for paper markets, most of the action was positioning on the Oct/Nov spread.
High sulfur fuel oil cash markets were even quieter to end the week, with only sellers in the market offering well above where Quantum's prevailing value sat from Thursday. With little to go on, cash differentials were left unchanged. There was plenty of action in the paper market, however, with Vitol an enthusiastic seller of October paper around the $357/mt mark, with Aramco and Mercuria the main buyers. That left flat the 380 CST prices up $3.78/mt at $358.61/mt.
