Asia oil/products: Crude edges up, gasoline cracks reach fresh low

Quantum Commodity Intelligence - Middle East crude oil prices climbed higher Wednesday although again largely lacked a definitive trend, while gasoline cracks tumbled to a fresh post-pandemic low.

Dubai cash for December delivery was assessed at $90.35/b for 26 October (1630 Singapore time), up $0.79/b from Tuesday, while the Dec22 DME Oman futures contract was up $0.36/b at $90.34b.

The Dubai partials window saw Dec22 partials trading in the $90.30-$90.40/b range, resulting in two more convergences to take the monthly total to four.

Unipec nominated Upper Zakum to Shell, while Reliance declared the same grade to Trafigura, valuing the Adnoc medium sour flagship grade at around Dubai swaps +$4.30/b. Oman and Al Shaheen were pegged at the same level.

Meanwhile, Dubai Petroleum published its OSP for January, leaving the differential to DME Oman unchanged at minus $0.05/b.

The distillate-rich Russian Sokol grade made a rare appearance this week with Rosneft offering six prompt-loading cargoes on November dates. In theory, the grade should trade at a comfortable premium over Dubai swaps, but with the limited pool of buyers and prompt dates the values look less certain.  

ICE Brent futures for Dec22 were valued $93.10/b at 1630pm Singapore, up $0.22/b from Monday's Asia close. This left the Dec22 Brent/Dubai spread at $2.75/b, narrowing more than 0.50/b on the day, while the Dec22 EFS was down $0.35/b to around $7.05/b at the Asian market close.

Products

November naphtha swaps climbed $5/mt on the day to $676/mt, while its backwardation to December widened to $7.50/mt as crude rose by the Asia close. The cash differential was kept static amid a lack of any fresh physical indications, pushing the spot price up $1.50/mt to $677.50/mt. The spot crack was down a touch to $5.93/mt, while the November crack nudged higher to $6.18/mt.

Gasoline remained under firm selling pressure with no open bids reported for the second straight session with 92 RON cracks hitting a fresh post-pandemic low. Sinopec lifted Vitol's offer for RON 92 cargo at $88.20/b for Nov 21-25 dates while Vitol offered down Nov 17-21 dates to $88.40/b. That caused the cash premium to fall to $0.76/b while the premiums for 95 and 97 RON fell more sharply as the octane spreads narrowed. Spot 92 RON was assessed $2.42/b lower at $88.40/b, its lowest since the start of the month and equivalent to a crack of -$3.22/b.

Diesel remained well bid by Vitol on 500ppm cargoes, and helped push cracks back above $40/b with physical prices up $1.11/b on the day to $132.12/b. BP and Unipec were far apart on 10ppm cargoes with a bid/offer spread around $2.25/b, and were assessed $0.86/b higher in line with swaps at $135.48/b. The November EFS rose on the day, but remained under -$75/b as European supply constraints continue.

Liquidity was thin again on jet, with FOB Singapore cargoes assessed $0.97/b higher in line with the paper at $123.24/b in the absence of physical indications. Cracks were $0.69/b higher at $31.62.

The marine fuel 0.5% cash market was dominated by Shell and Mercuria who offered along the curve during Asian trading hours and found no buy-side interest. The best offers on show sat around $3/mt above where prevailing value sat from Thursday and as such Quantum's cash differential was left unchanged at a $14.90/mt FOB Straits premium to swaps. Window action in the paper market was concentrated on November, where the market traded in a tight range before a final deal at $642.25/mt. With that, Quantum's outright price was assessed $37.55/mt lower day-on-day at $656.70/mt and the November crack to Brent was down $1.57/mt to just +$1.70/mt and leaving the M1 crack at its lowest since early August.

High sulfur fuel oil saw a single trade booked as PetroChina bought a cargo for 20-24 Nov on Vitol's offer at a flat price of $346/mt FOB Straits. While that deal cut across a clear bid-ask spread along the rest of the physical curve, it was taken as value for the backend of the market while the rest of the cash structure remained steady. With that, value continued to bounce around either side of the swaps market, with Quantum cutting $0.71/mt from its cash differential to leave it at a $0.39/mt discount to the curve. On the outright that left the 380 CST cargo price in Singapore up $4.29/mt day-on-day at $346.69/mt.