Asia oil/products: Crude tumbles over 3%, marine fuel cracks rise

Quantum Commodity Intelligence – Middle East crude prices tumbled over 3% Thursday, wiping out gains from the previous four sessions, while refined products were broadly in the black with the stand out performance seen for marine fuel cracks.

Dubai cash for September delivery was assessed $72.25/b on July 15 (1630 Singapore time), down $2.45/b from the previous session, while DME Oman settled $2.57/b lower at $72.29/b.

Traders cited confusion over reports of a Saudi/UAE deal on output levels and higher US production levels for the lower prices.

Cash Brent (BFOE) for September was assessed at $73.66/b, down $2.43/b on the day.

Despite flat-price volatility, the September cash Brent/Dubai spread was little changed at +$1.41/b, while the EFS narrowed by $0.11/b to $3.92/b.

Dubai inter-month spreads were also little changed on the day, with the market expected to remain tight until at least Q4. Sep/Oct Dubai was marginally lower at $1.45/b.

Products

All cracks were broadly in the black as product demand outstripped the fall in crude.

Naphtha was the exception as cracks eased as Quantum's assessment rolled more into early October deliveries and with the market in backwardation. Two deals were heard – one at $682/mt for 1H September delivery into Japan and another at $676.50/mt for 2H September. Demand still remains strong with assessed prices at $675/mt CIF Japan and a crack of $135/mt, down marginally on the day.

Gasoline cracks rose marginally on Thursday after several cargoes of 92 RON traded at $82.20-82.30/b FOB Singapore. That meant cash differentials were slightly lower, but the spot crack versus Brent still firmed as margins rose on weaker crude. Stocks of light distillates were at a three-month high in the city-state. RON 92 was assessed at $82.25/b, down $2.25/b on the day and at a crack of $8.59/b, up $0.18/b. RON 95 was bid at $1.80/b higher.

No jet deals were heard and cash differentials were marked at -$0.40/b on wide bid and offer spreads, leaving a flat price of $76.35/b FOB Singapore and a crack of $2.69/b, down $0.11 on the day, but around $0.20/b higher than the average so far this month. Q4 cracks were down by the same amount. Jet fuel demand in Asia is still relatively weak given the Covid-19 outbreaks. The regrade of -$2.70/b is broadly in line with the average so far this month and slightly firmer than the average for June.

One diesel 10ppm trade was heard at parity to swaps for August and equating to a cash differential of -$0.03 – a relatively high level for the past few weeks amid a small fall in Singapore stocks. The diesel crack of $5.39/b was around the average level so far this month and on a flat price of $79.05/b FOB Singapore.

Marine fuel was bid at a $1/mt premium versus a $2.50/mt offer, leaving the cash differential unchanged at $2.25/mt, giving a flat price of $405/mt and a crack of $3.69/b – a two month high. The rise in crack comes despite a small build in fuel stocks at the port and lower imports. Prices in China remain higher than those in Singapore – a dynamic that has lent support to cracks, although they remain seasonally low. Cash differentials for fuel oil jumped for 180cst on Wednesday with a deal heard at $3.25/mt above underlying swaps, which themselves firmed versus crude. The jump left the 180cst crack at a 10-day high of -$8.15/b versus Brent on a flat price of $416/mt. 380cst was bid at $1/mt over swaps and assessed at a $1.25/mt premium.