Asia oil/products: Crude resumes rally, gasoline cracks near 3-mth low

Quantum Commodity Intelligence – Middle East crude oil prices resumed the upward trend Tuesday amid faltering ceasefire talks on the Gaza conflict, while gasoline cracks slid to their lowest levels in nearly three months despite higher outright prices.

Front-month Dubai cash for June delivery was assessed $0.70/b higher at $90.75/b on 9 April, while Jun24 DME Oman was up $0.55/b at $90.64/b.

DME Oman was near parity with the IFAD Murban settlement of $90.65/b, pitting the two grades against each other in setting the Dubai print, with Murban slightly ahead so far this month based on physical convergences. Spot premiums for both grades were pegged at Dubai swaps +$2.20-$2.25/b, while Upper Zakum and Al Shaheen were seen at a similar value.

Traders said that the usual premium for lighter Murban has eroded on softer refining margins for sweet barrels, while competition from the Atlantic Basin also weighed on prices. Likewise, a heavy ESPO program of around 35 cargoes in May has also chipped away at Murban values, with the Russian grade heard selling into China at around parity to July Brent futures.

ICE Brent futures for Jun24 were valued at $90.75/b at the close (1630 Singapore), up $0.64/b versus the previous Asia close, leaving Jun24 Brent/Dubai at parity. The EFS for Jun24 was heard trading at +$2.20-$2.25/b on the Asia close, with the next two months pegged at the same level.

Singapore markets are closed Wednesday to mark the Eid holiday.

Products

Naphtha east-west economics continued to improve and hit the highest point in more than three weeks at $15.50/mt, up $1.50/mt on the day as the price rally in Europe slowed while petrochemical demand in Asia has risen slightly. Front-month swaps ticked $2.50/mt higher in Singapore to $704.25/mt, although it was not enough to offset the rise in crude prices as that left the month-ahead crack own $1.38/mt at $46.53/mt. May/Jun backwardation widened another $0.50/mt to $6/mt. In the CFR Japan cargo market, the most competitive bids and offers for 1H June shipment were just $1/mt apart from each other, with the former reported at $704/mt although no trades had been seen by the end of the session. Quantum moved its outright assessment $0.50/mt higher to $708.75/mt.

Traders put a brake on the recent buying spree of 92 RON gasoline in the FOB Straits market ahead of a midweek holiday in Singapore on Wednesday. That pressured cash differentials marginally lower to $0.99/b. Combined with stable May 92 RON swaps, which edged $0.15/b higher to $100.40/b, Quantum marked the spot cargo price up $0.15/b at $102.01/b. May cracks continued to slide for a sixth straight session to $10.67/b, down $0.38/b on the day amid crude strength. May/Jun backwardation was a touch lower at $1.30/b, down just $0.05/b on the day. A 50kb 95 RON parcel was sold by PTT to Unipec at a premium of $0.70/b over paper for Apr 24-28 delivery.

May/Jun backwardation in jet fuel continued to widen as the spread touched a three-week high of $0.20/b, up $0.05/b on the day as the market shrugged off recent bearish pressure from gasoil weakness as the market looked to the spring refinery maintenance period. May swaps were steady amid the short trading session, closing flat on the day at $107.20/b. That led to slightly weaker crack at $17.47/b, down $0.53/b on the day as crude prices rose slightly on the day. The cargo market was still quiet with no fresh trades heard during the session. Quantum marked the FOB Straits cargo price unchanged at $107.30/b. The east-west spread narrowed $4.07/mt to the closest point in nearly four months at -$41.67/mt.

Gasoil cash prices remained fixed at a discount to the paper market during trade on Tuesday, with another two deals seeing Vitol selling to Gunvor and Unipec during the Asia window ahead of a midweek break in Singapore. Two deals were booked at a $0.10/b FOB Straits discount to the curve, with a combined 370kb of 10ppm changing hands in the two deals. Adjusted for size, Quantum's cash differential held at a $0.20/b discount to the curve. With May paper holding at $108.70/b, the paper crack to Brent was back down $0.53/b at $18.97/b. Gasoil 10ppm cargoes were assessed at $108.56/b, up just $0.02/b on the day. Backwardation eased off again in the M1/M2 spread as it slipped $0.15/b to $0.30/b, while the EFS narrowed $1.77/mt to -$32.15/mt.

Marine fuel 0.5% sulfur refining margins continued to come off and touched a fresh three-month low during Tuesday's window, with ample regional supply from redirected Russian refinery bottoms and fresh flows out of the Middle East weighing on the regional market. Broker data showed May swaps up $2/mt on the day to $633.75/mt, a move that left the paper crack down $0.24/b on the day at $2.12/b. That came in a quiet session for the cargo market, where Quantum's cash differential was held at a $0.48/mt FOB Straits discount to the curve. On an outright basis, marine fuel cargoes were assessed at $633.79/mt, up $2.24/mt on the day. Backwardation came off a touch in the M1/M2 spread to $2.75/mt, while the east-west spread narrowed $1.27/mt to $36.51/mt.

High sulfur fuel oil prices in Singapore climbed to a fresh six-month high during trade on Tuesday, with the strength of the crude market continuing to drag bunker fuel prices along with it. 380 CST cargoes were assessed at $492.10/mt, up $3.99/mt on the day. Front month swaps rose $3.75/mt on the day to $496.50/mt, while refining margins have remained stubbornly firm despite the strength of crude, with the residual fuel seeing the May paper spread to frontline Brent futures up $0.06/b to -$11.54/b. However, HSFO cash differentials remain stubbornly below the paper market, with Quantum's 380 CST assessment marked at a $3/mt FOB discount to the curve. And paper structure continues to point to an oversupplied market, with the M1/M2 spread slipping back $0.25/mt from a razor-thin backwardation to flat. The east-west spread widened $1.50/mt to $9/mt.