Asia oil/products: Crude extends gains, buying spree lifts HSFO

Quantum Commodity Intelligence – Crude prices in Asia Thursday continued the firm end to the year, with gains since Monday now standing at around 4.5%, while activity in refined products was concentrated in the fuel oil market. 

Dubai cash for February delivery was assessed at $78.85/b for 22 December (1630 Singapore time), up $2.15/b on the session, a two-week high, while Feb23 DME Oman futures were $2.32/b higher at $79.49/b.

Despite the rise in outright prices, premiums for physical barrels continued to struggle with Upper Zakum and Al Shaheen pegged around Dubai swaps +$1.35/b, although Oman continued to pull away with seller looking for around $2/b over Dubai.

Market structure was strengthening further down the curve though as the one-year spread reached a one-month high of $5.60/b.

ICE Brent futures for Feb23 were assessed $82.37/b at 1630pm Singapore, up $2.30/b from the previous close, while the Feb23 Brent/Dubai widened slightly to +$3.52/b. The Feb23 EFS widened by around $0.15/b, valued around $4.80/b on the Asia market close.

Products 

Naphtha swaps lagged crude slightly, leaving paper cracks down on the day, albeit marginally. Physical indications showed little movement in the premium over swaps, leaving cracks versus Brent down at a three-week low as macro news and China's Covid impact weighs on economic sentiment. BP bid for H2 Feb cargoes delivered into Japan at $637/mt CIF with H1 March bid at $5/mt lower at $632/mt. Quantum assessed at $635.50/mt CIF, up $10/mt on the day on firmer crude. The east-west narrowed again as Russian material finds its way to Asia.

Gasoline cracks weakened slightly on Thursday, halting three successive days of gains. Swaps were down marginally versus crude, although the cash differential firmed on some cash bids in the Platts window. Vitol bid $87.50/b for 92 RON and Unipec bid $90.80/b for 95 RON FOB Singapore. Light distillate stocks are at a two month high.

Yet another session passed in the jet market with little in the way of new cash positioning on show. The January regrade was booked at a tight $1.70/b discount, giving some clarity to the paper curve in an otherwise quiet session. With that, Quantum's cash differential held at $0.50/b and gave an outright price up $1.97/b at $112.51/b, while the spot crack was down $0.25/b at +$29.86/b.

It was a quiet day in the diesel market, with only a handful of offers on show at the front of the 10ppm cash market as Trafigura sought to sell with no luck. Quantum's differentials were steady and in a fairly quiet session for the paper market, the outright price was able to creep $1.86/b higher to $115.42/b. The spot crack to Brent was down $0.36/b at $32.77/b. Data from Singapore showed middle distillate stocks up 3% last week to a three-week high of 7.2 million barrels.

The marine fuel 0.5% sulfur paper market was busy the Dec/Jan and Jan/Feb spreads were well traded with Gunvor a frequent buyer. For cash, Thursday's trade saw two deals as Trafigura sold to Sinopec at a $14/mt FOB Straits premium to the curve and Gunvor bought from BP for Jan 17-21 at $13/mt over. That raised the differential assessment $1.67/mt to $16.11/mt and left the outright up $11.13/mt at $569.08/mt, but the spot crack to Brent was back in negative territory as it slipped $0.60/b to -$0.17/b. Singapore stock data showed residual fuel inventories rising 1.3 million barrels this week to a six-week high of 21.4 million barrels.

PetroChina was in the high sulfur fuel oil market again, looking for 380 CST cargoes at $5.50/mt FOB Straits along the strip. Four deals were booked at that level, with Sinopec and Vitol selling cargoes for Jan 6-10 and for Jan 11-15 and lifting Quantum's cash curve. The differential was up $3.46/mt day-on-day at $5.56/mt, with moves in the paper market leaving the outright price up $15.98/mt at a one-month high of $381.30/mt.