Asia oil/products: Crude extends gains, jet diff spikes

Quantum Commodity Intelligence - Middle East medium sour crude oil prices were higher Monday, building on the previous week's solid 5% gains, while jet differentials spiked as a cargo finally changed hands.

Dubai cash for October delivery was assessed at $100.15/b for 29 August (1630 Singapore time), up $0.50/b, bouncing above $100/b for the first time in nearly a month, while DME Oman futures were up $0.94/b on the day at $100.46/b for the Oct22 contract.

Something of a standoff developed on the partials market ahead of Wednesday's expiry, with a wide bid/offer reported on the close. Upper Zakum was seen as the lowest of the Dubai basket grades, but potentially any of the five could be nominated due to the narrow price spread.  

Meanwhile, Dubai's Department of Petroleum Affairs has set the official selling price (OSP) for Dubai crude loading in November at a discount of $0.20/b to the average settlement of Oman crude oil futures traded on the DME in September versus parity in October.

ICE Brent futures for Oct22 were valued at $101.54/b at 1630pm Singapore, up $1.72/b from the previous Asia close, widening the October Brent/Dubai cash spread by more than $1/b on the day to $1.39/b.

The October EFS was also up more than $1/b at $6.15/b for Oct22, while the Nov22 EFS was trading around $6.85/b.

Products

Naphtha changed hands in the cash market for 1H November shipment at $675/mt CFR Japan as Gunvor bought from BP. That weighed on cash differentials, although a recovery in the paper market helped give a print $5.25/mt higher at $674.25/mt. The spot crack continued to slide, however, with the refining margin versus Brent falling another $1.35/mt to $57.52/mt.

Gasoline markets were again thinly bid and offered on 92 RON, with those on show weighing on the cash curve and giving a flat price $0.63/b lower at $107.99/b. A 95 RON trade loading 15-20 days ahead was heard between Aramco and Phillips 66 at $111.30/b FOB Singapore, which was taken as value and gave an outright price $1.56/b lower at $110.74/b. Refining margins lost ground as Brent rebounded from Friday's early losses, with 92 RON down $1.53/b at +$8.09/b and 95 RON down $2.46/b at +$10.84/b.

Jet activity continues to pick up after a long and quiet summer, with the first cargo changing hands for several weeks in the market on Monday as Aramco hit a bid from Trafigura at $3.10/b FOB Singapore for loading 13-17 September. Taken as value, that added $1.20/b to Quantum's cash assessment, which jumped to $3.10/b and gave a flat price $0.46/b lower day-on-day at $147.27/b. The big jump in the cash premium helped cushion some of the losses in refining margins seen elsewhere, with the crack to Brent down $1.36/b at +$47.37/b.

The diesel 10ppm market saw Aramco sell a cargo to Total at a $2.65/b FOB Singapore premium to the curve for loading 20-24 September and pricing around 26 September. In a trading window that was well bid and offered, Quantum's cash differential was assessed $0.28/b higher at $2.17/b and gave a flat price that was down $1.62/b at $152.55/b FOB Singapore. The spot crack to Brent was down for a second session, falling $2.52/b to +$52.65/b. The Sep/Oct intermonth spread eased a touch but Oct/Nov and Nov/Dec both saw notable gains.

Marine fuel 0.5% sulfur had a best priced-offer at $7/mt FOB Singapore over nearby swaps for a cargo loading 15-20 days ahead weighed on the front end of the cash market's structure and shaved $0.80/mt from the differential assessment as it was marked at $8.06/mt. That left the outright down $5.30/mt at $733.17/mt and left the spot crack versus Brent down $1.66/b at a three-week low of +$6.36/b.

High sulfur fuel oil cash differentials were little changed at the start of the week, with a bid and trade in the 180 CST market at $2.50/mt for loading 15-20 days ahead. The flat price was marked $2.64/mt lower at $498.56/mt. The 380 CST saw less activity, with bids at $4/mt along the delivery laycan hit by Vitol for loading 15-20 days ahead at the same levels. That left the Quantum differential steady at $4.25/mt and translated into an outright down $0.70/mt at $474.33/mt.