Asia oil/products: Dubai crude gains on Brent, cracks rebound

Quantum Commodity Intelligence – Middle East crude pulled back Tuesday on growing concerns over the delta covid variant, while refined product cracks stabilised as the value of crude caught up with sluggish demand.

Dubai cash for August delivery was assessed at $72.78/b on June 29 (1630 Singapore time), down $1.07/b from Monday, but DME Oman futures for August tumbled to $72.00/b ahead of the contract expiry.

However, ADNOC informing term customers of 15% cuts to September loadings has bolstered the Dubai market structure, with Aug/Sep cash holding close to $1/b, while the Sep/Oct spread widened to $1.05/b.  

Cash Brent (BFOE) for August was assessed at $74.58/b, down $1.35/b from Monday's Asian close, narrowing the Brent/Dubai spread to $1.80/b and the EFS to $3.79/b.

The spread of the delta variant in Asia has added another layer of uncertainty ahead of Thursday's meeting, although consensus is still for an August production hike of 500,000 bpd.

Products

The 2% day-on-day dip in the value of key benchmark crudes helped stabilise Asian refining margins on Tuesday, with falls in crude outpacing those seen in most key refined products.

Spot naphtha cracks rose to their highest level in nearly three months at $111/mt. No spot deals were heard and swaps fell just $6/mt versus a $1-1.50/b fall in the value of crude. Petrochemical demand remains strong. The flat price was assessed at $657.50/mt CIF Japan.

Gasoline cracks rose slightly on weaker crude, with RON 92 marked at $5.97/b on a flat price of $80.55/b FOB Singapore. Gasoline cracks remain in an upwards trend despite the lockdowns across Asia, having risen from $4.50/b since the start of June as weaker crude helped support margins. No deals were heard.

Distillate cracks rebounded slightly on Tuesday, with 10ppm diesel rising to $4.69/b from $4.39/b on Monday and jet fuel rising $0.13/b to $3.63/b. That was more of a function of weaker crude than any rising demand picture, with bids and offers heard remaining far apart. 10ppm flat prices were marked at $79.27/b FOB Singapore and jet at $76.41/b FOB Singapore on cash differentials of -$0.15/b for 10ppm diesel and -$0.40/b for jet.

Higher sulfur fuel oil cracks slipped alongside weaker crude while distillate-heavy marine fuel oil cracks firmed. Three trades were heard with 180cst trading at -$1.25/mt to nearby swaps and marine fuel 0.5% trading at $530/mt, both FOB Singapore.