Asia oil/products: Crude little changed, cracks creep higher
Quantum Commodity Intelligence – Middle East crude prices were little changed on the day Friday, while refined products cracks rose across the board.
Dubai cash for September delivery was assessed $72.20/b on July 16 (1630 Singapore time), down $0.05/b from the previous session, while DME Oman was unchanged at $72.29/b.
Medium sour crude prices ended the week just 1% lower, despite the volatility and downwards pressure after the Saudi/UAE production pact was reported.
However, signs of structural weakening were seen with forward curve spreads narrowing.
Cash Brent (BFOE) for September was assessed at $73.59/b, down $0.07/b on the day, while the September cash Brent/Dubai spread was little changed at +$1.39/b.
But the September EFS narrowed by $0.15/b to $3.77/b, reflecting the weakening market structure.
In the spot market, Chinese buying remains sluggish, while Al Shaheen was heard sold via tender at around Dubai swaps +$2.75/b. Qatar Petroleum had offered out three September cargoes.
Products
Product cracks improved again on Friday with fuel oil the big mover as cash differentials remain firm, particularly for higher sulfur grades due to an ever wider Hi-5 spread.
Naphtha cracks firmed again on Friday to set another multi-month record as fears of lower than expected refinery runs remain. H2 September was bid at $681/mt CIF Japan and H1 October was bid at $670 versus $676/mt. The flat price was assessed at $677.50/mt, with the crack at $138/mt.
Spot gasoline cracks also rose. Two deals were heard that pegged spot value for 92 RON at $82.30/b FOB Singapore. Indian demand for gasoline is so far steady on June levels in the first two weeks of July and is seasonally high. The crack rose $0.12/b to $8.71/b.
There were no jet fuel trades heard in the market, although bids and offers indicated a firmer cash differential at around -$0.30/b under swaps. Demand remains subdued, however, with cracks being aided by firmer margins for diesel. Flat price was assessed at $76.56/b and a crack of $2.97/b. The regrade was flat at -$2.68/b.
Diesel 10ppm firmed, with two spot trades at parity to underlying swaps. Indian demand is steady in the first half of July, according to preliminary data. The flat price was marked at $79.24/b FOB Singapore and a crack of $5.65/b.
Fuel oil cracks firmed on spot demand. Two trades were heard with high sulfur changing hands at 380cst at a $0.50/mt and $1/mt cash differential to swaps, although the latter could not be confirmed. The Hi-5 spread remained at $128/mt. Marine fuel cracks versus cash Brent remain at a two-month high, having been in a bull pattern for the past three weeks.
