Asia oil/products: Crude slump resumes, supports product cracks

Quantum Commodity Intelligence - Asian crude prices fell Monday after a further slump in western benchmarks since the previous Asian settle, generally supporting product cracks despite flat prices sliding to multi-month lows.

Dubai cash for May delivery was assessed at $70.29/b for 20 March at the Asia close (1630 Singapore), down $4.56/b, while May23 DME Oman futures closed $4.58/b lower at $70.35/b.

However, Asian markets again proved more resilient than western prices, with the Brent/Dubai cash spread crunching to near parity, the lowest in six months, while the prompt EFS retreated to levels not seen since the pandemic.

Meanwhile, NIOC set the OSP on Iranian Light crude for Asia at $2.50/b over the Platts Oman/Dubai average for April, versus $2.00/b in March, largely following other producers with similar-quality grades.

However, Iranian barrels were heard at steep discounts to OSPs in order to compete with discounted Russian Urals.

ICE Brent futures for May23 were assessed $70.31/b at 1630 Singapore, down $5.06/b from the previous Asia close, while May Brent/Dubai narrowed $0.50/b to just $0.02/b, the lowest since late September. The May23 EFS crunched around $0.90/b to $1.30/b on the Asia market close, while June was heard at $1.75-$1.80/b.

Products

It was a quiet start to the week for the naphtha market, with only Shell offering cargoes in the window with its level moving down to a best-priced $602/mt CFR Japan for 1H May by the Asia close. That did not disprove any existing levels in Quantum's assessment, with differentials to paper held steady and leaving the outright price down $39.25/mt at a 22-month low of $598/mt. That left the spot crack to Brent down $3.41/mt at +$82.77/mt.

Gasoline cargo prices continued to bounce around amid the wider market turmoil for energy markets, with cash prices jumping as paper slipped further. It was a busy session with three deals booked in the 92 RON market by the end of the day, as PTT and SK Energy sold 50kb cargoes to OQ for Apr 8-12 at $86.20-$86.40/b FOB Straits. PTT sold a third 50kb cargo to Phillips 66 at $86.20/b for Apr 12-16. That pushed cargo prices back up from Friday's selloff, although the drop in crude left the outright nearing a three-month low, sliding $3.95/b to $86.52/b. The selloff in Brent proved far greater, however, with cracks up for a second session and posting a rise of another $0.94/b to +$16.23/b.

Jet cargo markets remained quiet despite wider market turmoil, with BP again seller in the Platts window and joined by Sinopec as neither found any buy-side interest at current levels. BP's offer was the best on show at a $1.20/b FOB Straits premium to the curve for delivery Apr 4-8. That was well off the $0.81/b differential from Friday, leaving the physical market assessed unchanged as moves in the paper left the outright down $5.18/b at a 14-month low of $91.40/b. The spot crack to Brent could not avoid the selloff, slipping $0.29/b to +$21.11/b.

There were bids and offers along the diesel cash curve, with Total a most competitive seller in the 10ppm market at the start of the week as it looked to offload an April 15-19 delivered parcel at a $1.50/b FOB Straits premium to paper pricing around Apr 7. The flat price was marked $4.74/b lower at a 14-month low of $96.05/b, although the spot crack to Brent was able to tick another $0.15/b higher to a fresh one-month high of +$25.76/b.

There was plenty of interest in the marine fuel 0.5% sulfur market, with a tight bid-ask spread along the cash curve to start the week. That pushed a deal through at the back end of the cash curve, with Shell selling to Sinopec at a $9/mt FOB Straits premium to paper, which left the cash differential assessed $1.90/mt higher than Friday at $8.34/mt. The flat price fell $19.67/mt to $515.89/mt – its lowest since August 2021. The spot crack to Brent continued to recover, however, gaining another $2.04/b to hit a one-month high of +$4.48/b.

High sulfur fuel oil saw a single trade booked as demand for 180 CST cargoes remained robust. Phillips 66 paid Trafigura an $8/mt FOB Straits premium to paper for the Apr 15-19 parcel. That pushed the differential $0.19/mt higher to $8.34/mt. The outright was marked $20.72/mt lower at $379.20/mt as a result. There was less activity in the 380 CST market, although PetroChina remained in the market as it bid an Apr 4-8 delivered cargo at a $8/mt and found no sell-side interest. That lifted the cash differential $1.15/mt to $8.13/mt and pushed the 380 CST price $18.09/mt lower to $367.69/mt.