Asia oil/products: Crude higher, distillate cracks rebound from lows

Quantum Commodity Intelligence - Middle East crude prices Tuesday were higher, largely tracking the rebound in Brent futures, while distillate cracks rebounded as another day passed without China announcing fresh road fuel export quotas.

Dubai cash for November delivery was assessed at $92.55/b for 20 September (1630 Singapore time), $2.20/b higher on the day, while DME Oman futures were up $2.23/b at $92.60/b for the Nov22 contract.

Dubai partials last traded at $92.55/b, setting the quote, while Oman partials were bid at $92.60/b.

The QatarEnergy tender for two cargoes of November Al-Shaheen crude was heard awarded at premiums of around $5/b to Platts Dubai quotes, at the low end of expectations with the key M1/M3 spread (Nov22/Jan23) closer to $6/b since last week.

Typically, the prompt Dubai spread acts as a support level for Al Shaheen as the grade is deliverable against Dubai partials, so the relatively weak premium for the Qatari grade could indicate a slowdown in demand for medium sour barrels. 

ICE Brent futures for Nov22 were valued at $92.85/b at 1630 Singapore, up $2.55/b from the previous Asia close and flipping the Nov22 Brent/Dubai cash spread back to a positive of +$0.30/b. The Nov22 EFS was trading around $0.10/b higher at $6.15/b on the Asian market-on-close. Murban partials traded at $93.55/b, around $0.50/b under IFAD Murban futures.

Products

The naphtha cash market saw a deal booked for 1H November from Shell to Chevron at $682/mt CFR Japan, while BP was the sole participant in the cash market again on Tuesday, lifting its bids to $682/mt for the 2H November laycan. With the deal and bid keeping Quantum's cash structure steady, the flat price was marked $18.50/mt higher day-on-day at a one-month high of $682/mt. The spot crack continued to creep higher, gaining another $0.39/mt to a five-week high of $8.15/mt. The east-west spread was up another $2/mt at $40.50/mt.

Gasoline trade was slow in the cash market, with a wide bid-ask spread along the physical curve making no difference to where Quantum's assessment sat. Moves in the paper market did all the lifting, with 92 RON bouncing $5.24/b from Monday's seven-month lows to $92.69/b. That helped to lift cracks too, with the spot refining margin compared to Brent up $2.77/b from the two-year lows seen in the previous session to +$0.76/b.

Jet recovered ground amid a wider buyback in the middle distillates market, with a lack of clarity over rumours China could boost its oil product export quotas persisting. Aramco was the sole participant in the cash market, offering along the strip but at levels that left Quantum's cash differential unchanged from Monday at a $0.21/b FOB Singapore premium to swaps. Despite that, moves in the paper market meant the flat price was up a solid $7.41/b at a one-week high of $116.84/b, with the spot crack to Brent jumping $4.94/b to +$24.91/b.

Diesel prices clawed back more ground after last week's big losses as clarity over whether China would release fresh road fuel export quotas again failed to materialise. In the 10ppm cash market, bids along the curve from Trafigura and Vitol were far away from the sole seller in the market in the shape of PetroChina. That left the cash differential unchanged from Monday, but big moves in the paper market meant the spot price was assessed $8.01/b higher day-on-day at $125.06/mt and with a spot crack to Brent up $5.54/b at +$33.13/b.

Marine fuel saw only limited participation in the cash market on Tuesday, with offers from Maersk, Trafigura, and Vitol through the window finding no buy-side interest. While the levels on show remained well away from where Quantum saw value, the paper market was able to lift the wider assessment. The outright price was up $21.50/mt at $668.36/mt, with the spot crack to Brent continuing to creep higher as the refining margin was up another $0.64/b at a three-week high of +$4.93/b.

Fuel oil prices edged higher, with the sole physical trade heard through the day booked in the 380 CST market as PTT sold a cargo loading 5-9 October to Trafigura at a $3/mt FOB Singapore discount to swaps. That confirmed value remained steady in the 380 CST cash market as moves in paper lifted the outright $8/mt from Monday to $379.47/mt.