Asia oil/products: Crude posts firm gains, road fuels snap losing run

Quantum Commodity Intelligence - Asian crude markets rallied strongly on Tuesday as attention again switched to the potential crunch on OPEC+ supplies, while road fuel cracks snapped their recent losing streak and bettered the jump seen in the crude market.

The producer alliance holds a crucial meeting next week to discuss policy beyond September, but after the group's confirmation this week that output is running nearly 3 million bpd below target, traders see a tight supply/demand balance heading into the northern hemisphere winter.

Dubai cash for September delivery was assessed at $104.98/b for 26 July (1630 Singapore time), up $3.77/b from the previous session, while DME Oman futures for the Sept22 contract were up $3.63/b at $105.17/b.

The market structure was seen holding firm heading into the September-cycle expiry as M1/M3 (Sep22/Nov22) was valued above +$9/b, supporting a hike in OSPs, although increases may be tempered by the slump in Asian refining margins this month.

ICE Brent futures for Sep22 were assessed at $106.78/b at the Singapore 1630 close, up $4.25/b from the previous Asian close. The September Brent/Dubai cash rebounded to +$1.80/b, up nearly $0.50/b on the day, while the September Brent/Dubai EFS was up $0.17/b to $10.93/b.

Products 

Naphtha saw activity start to pick up heading into the end of the month, with the paper and physical markets well defined. In the physical market, Shell sold a cargo to BP for 1H October shipment at $769/mt CF Japan. For paper, deals were booked for August at $767/mt and at a $2/mt backwardated spread to September. That left the outright up $8.50/mt from Monday at $769.50/mt and the spot crack to resurgent Brent down $21.69/mt at +$18.18/mt.

Gasoline saw cargoes of 95 RON traded at the front end of the delivery laycan, with bids from Vitol hit at $117.50-$118.10/b FOB Singapore, with subsequent bids well below those levels. For 92 RON, a wide bid-ask spread defined the cash curve. Swaps were less clearly defined as Brent rallied, but Tuesday's moves left the 92 RON outright up $7.50/b at $113.19/b. The spot crack continued to rebound from last week's lows, up $3.38/b to +$10.69/b.

Jet yet again saw no fresh activity on either side of the physical market. That meant the cash differential remained unchanged, while moves in a well-defined paper market helped snap a six-session losing streak and add $6.51/b to the outright to a one-week high of $130.38/b. Even as crude spiked on Tuesday, the spot crack to Brent was in positive territory and halted a nine-session slide as it gained $2.39/b to +$27.88/b.

Diesel offers from Unipec and PetroChina at the front and middle of the 10ppm cash market lowered the physical curve, while the structure was unchanged. That took $0.43/b off Quantum's cash differential to leave it assessed at a $1.41/b FOB Singapore premium to nearby swaps. That meant the flat price was up $6.57/b at $138.35/b, with the spot crack to Brent up $2.45/b at +$35.85/b.

Maine fuel 0.5% sulfur had a trade at the front end of the market heard at a $50/mt FOB Singapore premium to nearby swaps as PetroChina bought from Trafigura. That shaved another $0.50/mt from Quantum's cash market assessment to $52.25/mt. On the flat price, that meant the assessment rebounded $45.50/mt to $802.75/mt, with the spot crack to Brent back up $2.47/b to +$13.84/b.

High sulfur fuel oil had a quiet session with a wide bid-ask range seen on both viscosities, with no interest from either side of the market at the front end of the cash curve. With cash differentials unchanged from Monday, that meant moves in swaps left the 180 CST price up $21/mt at $504/mt FOB Singapore, with 380 CST gaining $20.75/mt to $471.50/mt.