Asia oil/products: Crude edges up, gasoil cracks continue slide

Quantum Commodity Intelligence – Crude prices in Asia posted a first gain of the week in Friday's early close ahead of a long Singapore weekend, although gasoil cracks remained under pressure as supply continued to pick up.

Front-month Dubai cash for January delivery was assessed $0.31/b lower at $81.61/b on 10 November but still down around 7.5% on the week. Jan24 DME Oman was trading at around parity with cash Dubai.

So far this month, no convergences have been reported in the MOC Dubai window, but Oman is notionally setting the Dubai print, although Upper Zakum and Al Shaheen were seen at only a small premium, valuing all three grades at Dubai swaps +$1.45-$1.60/b.

Murban was valued around Dubai swaps +$1.40-1.50/b, while ESPO was talked at around parity to March Brent futures on a delivered China basis, as the narrow EFS means Atlantic Basin arbitrage barrels provide stiff competition for regional barrels.

ICE Brent futures for Jan24 were valued at $80.50/b at the Asia close (1630 Singapore), up $0.36/b versus the previous Asia close. The frontline Jan24 Brent/Dubai was slightly narrower at -$1.10/b, while the Jan24 EFS was steady at $0.45-$0.50/b.

Quantum will not publish Asian prices or commentary on Monday, 13 November, due to the Singapore holiday, with normal publishing schedules returning on 14 November.

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The naphtha market ended the week in a slightly bullish tone with front month prices recovering most losses the day before. December swaps gained $7/mt on the day to $632/mt. That pulled month-ahead cracks up by $4.51/mt at $43.62/mt. There were some last-minute actions in the CFR Japan physical market during the half-day trade session. Bids for 2H January cargoes rose to $628/mt against offers reported at $634/mt. However, no cargoes changed hands by the end of the day. Backwardation widened slightly from its recent low, with the M1/M2 spread up $0.75/mt to $1.75/mt. The east-west spread also rose $2.25/mt to $18.25/mt.

Gasoline prices moved in a similar trend on Friday with front month swaps rebounding $1.20/b to $88.10/b, similar to its mid-week level. Cracks continued to follow European markets higher, with the month ahead spread to frontline Brent futures gaining $0.86/b to touch a fresh six-week high at $7.83/b. One 95 RON cargo was traded in the FOB Singapore market at $99.65/b for Nov 25-29 delivery. The intermonth spread at the front of the curve widened slightly, with the M1/M2 spread up $0.10/b on the day to $1.25/b.

Jet fuel prices remained under pressure into the end of the week, with front-month swaps down $1.20/b to $100.45/b, pulling cracks versus Brent down $1.54/b on the day to $20.18/b. The physical market still lacked activities with no fresh trades heard. Hence, the curve flattened with the calendar spread between M1 and M2 eased $0.05/b on the day to $0.45/b. The east-west spread narrowed $1.71/mt to -$48.76/mt.

Gasoil prices continued to tumble amid a glut of supply that has weighed on the market all week, with broker data showing month ahead cracks to frontline Brent futures down another $1.44/b on the day at $20.88/b. The crack touched a fresh four-month low during trade on Friday, with the move coming as December swaps were marked down another $1.10/b on the day at $101.15/b. With no business heard in the cargo market, that left 10ppm cargoes assessed down $1.56/b on the day at $101.33/b. Demand persisted in the 0.25% cargo market, with Vitol heard booking another parcel from PTT for delivery Nov 27-Dec 1 at a $3/b FOB Straits discount to the gasoil curve. That trimmed $0.20/b from Quantum's cash diff to match the deal, with the outright falling $1.26/b to $98.23/b. Further pressure was heaped on the market as South Korean refiner GS Caltex was heard offering eight 300kb gasoil cargoes for December delivery, with four 10ppm parcels, one 50ppm, and three 500ppm all available via a tender closing Friday.

Activity picked up in the marine fuel 0.5% sulfur cargo market, as Shell was heard selling a Nov 25-29 delivery 20kt parcel to Sinopec at a $29/mt FOB Straits premium to the curve. With supply in the region set to remain tight, that pushed Quantum's cash differential assessment back up $4/mt to match the trade. With December swaps seen $2/mt higher at $596/mt, Friday's move left cargoes assessed at $642.06/mt, up $4.09/mt on the day. The rest of the moves in the marine fuel market were minor, with cracks almost unchanged as the month ahead spread to frontline Brent futures was marked down $0.05/b at $6.11/b. Backwardation was a touch lower as the M1/M2 spread was lowered $0.25/mt to $22/mt.

And it was a quiet end to a quiet week for the well-supplied high sulfur fuel oil 380 CST cargo market, where no new deals were heard in the physical trade as buyers remain content to sit back and wait for further discount to appear. Broker data showed a slight recovery in prices amid the week's wider selloff in crude markets, with the December swap assessed up $5/mt on the day at $436.50/mt. Cracks also enjoyed some support from weak crude, with the December spread to frontline Brent futures up $0.45/b at -$11.53/b. Backwardation also showed some signs of widening as the M1/M2 spread was up $0.25/mt at $6.75/mt. The east-west was steady at the end of a firm week, holding at $15.50/mt – the highest it has been since May.