Asia oil/products: Crude retreats, refined products follow

Quantum Commodity Intelligence – Asian crude oil prices opened the week lower, playing catch up with the steep post-Asian close losses on Friday for international benchmarks, while refined products largely retreated in unison with crude prices. 

Dubai cash for December delivery was assessed at $89.66/b for 17 October (1630 Singapore time), down $2.44/b on the day, while the Dec22 DME Oman futures contract was down $2.46/b at $89.60/b.

Dubai partials for Dec22 were well traded in a $89.65-89.70/b range, although convergences remain at just one Oman cargo for the month to date.

Spot activity, however, remains subdued as traders look for policy signals from the Chinese Communist Party gathering in Beijing, particularly with regards to economic stimulus and a further building of stockpiles.

For medium sour grades, a gauge to spot premiums should come when QatarEnergy awards in Al Shaheen tender early this week, with premiums pegged at around Dubai swaps +$4.50/b ahead of the tender deadline Monday.

But the East of Suez benchmark continued to lose value versus Brent on the like-for-like Dec22 cash spread, as the firmer Brent complex outpaced Dubai.  

ICE Brent futures for Dec22 were valued at $92.05/b at 1630pm Singapore, down $1.92/b from the previous Asia close. The Dec22 Brent/Dubai spread widened to a near three-month high of $2.39/b, while the Dec22 EFS edged up to $6.84/b on the Asian market-on-close.

Products

Naphtha prices dipped but refining margins jumped sharply with bids from BP at $662/mt for H2 Dec delivery into Japan leaving naphtha holding up better than crude. Quantum assessed at $661/mt for H2 Dec/H1 Jan loading taking into account a small backwardation. With refineries scheduled to be out for maintenance later this year, the market saw some support to claw back Friday's losses. Cracks were seen at -$8/mt. The market structure was largely unchanged day on day.

Gasoline broadly tracked crude on Monday, with bids from Unipec at $90.50/b for loading Nov 1-9, leaving 92 RON assessed in the backwardated market at $90.44/b, down $1.47/b on the day. With crude falling by $2/b refining margins were marginally higher. Offers for 92 RON were seen $1/b higher. 95 RON was bid at $93.60/b FOB Singapore, indicating a $3-3.20/b premium over 92 RON.

Jet cash differentials rose sharply on the back of an outstanding bid by Unipec seeking a Nov 5-9 cargo loading out of Singapore at $1.20/b above underlying swaps. That pushed the cash differential up $0.60 to $1.20/b, steepening the backwardation in the market. Flat prices were assessed at $126.39/b, down almost $1/b on a day when crude fell $2/b. Jet continues to price at close to arb levels, with the east-west for Nov static on the day at -$90/b.

The backwardation in the 10ppm diesel market widened marginally and the November EFS was marginally wider at -$106/mt. For the most part, Singapore swaps are tracking European movement. Swaps were down $1.55/b for November and $1.80/b for December by 1630 Singapore, marginally less than the fall in crude. Cash differentials were unchanged at around $5/b, with a bid from BP at $3.88/b over underlying swaps versus an offer of $5.5/b from Unipec that did not test the prevailing level.

Marine fuel 0.5% sulfur trading was dominated by Shell and Trafigura looking for buyers throughout the delivery laycan and finding little buy-side interest. In the floating storage market, BB Energy, Repsol and Sinopec were also looking for buyers and found little interest from the other side of the market. With the spot differential assessment steady day-on-day at a $19/mt FOB Straits premium to a thinly traded paper market, the flat price was down $20.10/mt from Friday at $676.21/mt. The spot crack versus Brent continued to bounce around in its recent range as it fell $0.96/mt to +$6.73/b.

High sulfur fuel oil cargoes traded twice during the Asian trading window, with two 380 CST deals booked on bids as Vitol sold to PetroChina for delivery 11-15 November at a $3/mt FOB Straits discount to swaps. With the low bids hit and little else to adjust the cash curve, the differential was assessed unchanged from Friday at a $0.02/mt discount to swaps. A busy day for paper weighed on the market as 380 CST fell $14.53/mt to its lowest level in two years at $344.08/mt.