Asia oil/products: Crude extends gains, diesel cracks jump

Quantum Commodity Intelligence - Benchmark Dubai crude registered gains for a fourth consecutive session Friday as the ripple effect from the OPEC+ output decision continued to be felt, while diesel cracks continued to rise on European market strength.

Dubai cash for December delivery was assessed at $94.35/b for 7 October (1630 Singapore time), up $1.09/b on the day and a fresh three-week high, while the Dec22 DME Oman futures contract was up $0.89/b at $94.24/b.

Market structure and premiums for physical grades were also consolidating at higher levels, with the M1/M3 spread (Dec22/Feb23) also hitting a three-week high of $5.82/b.

Medium sour grades, including Oman, Upper Zakum and Al Shaheen, were again heard offered at around Dubai swaps +$6/b for December, while spot activity is expected to step up next week with buy tenders anticipated from Indian and Chinese refiners. On the sell side, QatarEnergy is expected to offer Al Shaheen.

ICE Brent futures for Dec22 were valued at $94.63/b at 1630pm Singapore, up $1.06/b from the previous Asia close. The Dec22 Brent/Dubai spread was steady at $0.28/b, while the Dec22 EFS was pegged slightly up at $6.10/b on the Asian market-on-close.

ADNOC confirmed its November Murban OSP at $92.45/b, as per the IFAD monthly average, compared to the October price of $98.06/b.

Products

Gasoline prices hit three-week highs in Singapore and cracks moved back to positive territory to end the week flat, but downward pressure remains amid plentiful supply. Only offers were tabled on 92 Ron gasoline, with the best at $94.50/b on MW dates, and were assessed at $94.41/b, up $1.62/b on the day. Cracks closed at +$0.16/b to ICE Brent Asia close. 

There were again no physical jet indications, but the tightening gasoil market pulled jet fuel up in its wake, rising nearly $12/b versus Brent this week. Yet the November regrade widened $0.20/b to $8.20/b as jet demand is in its seasonal decline while diesel strengthened. The cash differential was unchanged at $0.50/b over swaps, leaving a flat price indication of $129.91/b, a fresh three-week high.

BP continued to bid 10ppm diesel cargoes higher on Friday, pushing its prompt bid to $5.90/b above swaps, following the strength in the European diesel market a day earlier. Unipec offered a cargo for similar dates at $7.20/b over swaps. The cash differential was assessed at $6.16/b above swaps, giving a flat price of $147.08/b, equivalent to a crack of $52.83/b, a five-week high. European cracks have jumped nearly $20/b since the start of the week to a three-month high of $67.20/b as two-thirds of France's refining capacity has been hit by strikes. October 10ppm swaps are now nearly $100/mt below the same ICE LSGO contract, its widest since late March which should shift more barrels west.

The marine fuel 0.5% sulfur paper markets were well-defined at the front of the curve, with Gunvor booking the equivalent of 25,000 mt of October paper at $707/mt and Trafigura selling the Oct/Nov spread at $33/mt. In the cash market, offers from Shell, Trafigura and Vitol were far apart from a sole bid from Gunvor, which left the physical differential steady at $21/mt FOB Straits. Those moves left the flat price up $4.53/mt day-on-day at $715.78/mt and the spot crack to Brent down $0.42/mt at +$9.49/mt.

High sulfur fuel oil cash differentials continued to tick further into positive territory as PetroChina booked a 27-31 October 380 CST cargo from Vitol at $386/mt FOB Straits and another for 2-6 November at the same price. That added another $0.15/mt to Quantum's cash assessment and left the outright price up $2.41/mt at a three-week high of $386.41/mt after a busy day for the paper market.