Asia oil/products: Crude rally continues, distillate cracks up again
Quantum Commodity Intelligence – Dubai crude oil ramped up to three-month highs as East of Suez markets maintained the month's firm uptrend, while middle distillate cracks continued to rally amid firm demand.
Dubai cash for September delivery was assessed at $82.52/b for 24 July at the Asia close (1630 Singapore), up $0.78/b and registering the highest print since 25 April, while Sep23 DME Oman futures were up $0.91/b at $82.56/b.
The flat-price rebound this month has largely been triggered by additional August cuts announced from Saudi and Russia at the start of the month, but a thirsty appetite from Asia's refiners gearing up for Q4 has also propelled prices back into the $80s.
The Dubai structure also continued to strengthen with the key M1/M3 (Sep23/Nov23) at +$1.82/b, the highest in a month, while premiums for Oman, Upper Zakum and Al Shaheen firmed to Dubai swaps +$1.80-2.00/b.
On the lighter barrels, Murban premiums ramped up to Dubai swaps +$2.30-2.40/b, as gasoil cracks surged to a four-month high, while the medium-sweet sanctioned ESPO was heard at around Brent -$5.50/b on a FOB Kozmino basis.
ICE Brent futures for Sep23 were assessed $80.97/b at 1630 Singapore, up $0.74/b from the previous Asia close, yet again widening the Sep23 Brent/Dubai spread to around -$1.55/b. The notional Sep23 EFS was pegged at $0.25-$0.30/b on the Asia market close, while Oct23 was trading around $0.75/b.
Products
The naphtha curve remained in a thin contango at the start of the week, with demand remaining underwhelming despite recent signs of activity looking to pick up. A best priced offer was on show for a 1H Oct shipment parcel at $603/mt CFR Japan, which was above where prevailing value sat in the market. That left Quantum's cash curve unchanged from Friday, with moves in the paper market leaving the outright up $3/mt at a two-month high of $601.75/mt. The spot crack to Brent pulled back $2.64/mt to +$9.27/mt.
Gasoline activity slowed down after a busy week last week, with no fresh deals heard by the close of business on Monday. Bids and offers were not enough to adjust structure in the cash market, with a best priced 92 RON bid around $99.03/b FOB Straits at the front end of the steeply backwardated curve and an offer at $98.60/b at the back end of the curve. That left Quantum's cash assessment at a $1.40/b premium to paper, with moves in the rest of the swaps market leaving the outright up $1.72/b at a three-month high of $98.93/b and the crack to Brent up another $0.95/b at +$18.10/b.
Interest in the jet fuel cargo market showed further signs of picking up, with a bid from Vitol for a parcel delivered at the front end of the cash curve heard at a $0.50/b FOB Straits premium to the curve. That put another $0.08/b of upward pressure on Quantum's cash differential, which was assessed at a $0.38/b premium to the curve. The August regrade to 10ppm paper continued to widen, trading out as far as $2/b during Monday's session, with that move helping to leave the outright up $2.18/b at a four-month high of $103.61/b. The spot crack to Brent jumped another $1.41/b to +$22.78/b.
Diesel cargo prices continued to creep higher, with a 10ppm deal in the cash market heard from Trafigura to BP at a $1.50/b FOB Straits premium to paper for delivery Aug 13-17. That pushed Quantum's cash differential up another $0.49/b to $1.39/b, with moves in a busy paper window lifting the outright price $2.68/b to a fresh four-month high of $106.64/b. The spot crack Brent continues to improve, gaining another $1.91/b to hit a five-month high of +$25.81/b.
Marine fuel 0.5% sulfur cargoes remained at a discount to the paper market, with another deal heard done at the start of the week at a $2/mt FOB Straits discount to the curve for delivery Aug 18-22. Slim backwardation persisted near the front end of the paper curve, with the Aug-Sep spread well traded at $1.75-$2/mt. Those moves left Quantum's outright up $8.64/mt at a two-week high of $561.56/mt, with the spot crack to Brent up $0.49/b at +$0.56/b.
High sulfur fuel oil cash differentials started to ease off after several weeks at an exaggerated premium to paper, with Vitol offering a parcel at the back end of the 380 CST cash curve at $11/mt FOB Straits. That cut $2.24/mt from Quantum's differential as it was assessed at $10.74/mt, with moves in the paper market leaving the outright up $5.16/mt at $487.68/mt. The spot crack to Brent was steady near its 15-month highs, marked $0.04/b higher on the day at -$4.03/b.
