Asia oil/products: Dubai crude rebounds, diesel EFS widens again

Quantum Commodity Intelligence – Middle East crude prices rebounded from 2024 lows Tuesday while the diesel market arb hit its widest level in a month on the back of renewed European strength.

Front-month Dubai cash for January was up $1.75/b at $72.25/b on 19 November, up from the previous session's 20-month low, while Jan25 GME Oman was up $1.71/b at $72.21/b.

The rebound came largely on the back of a recovery in global crude benchmarks amid a spike in geopolitical tensions and production losses in the North Sea and Kazakhstan.

But premiums for cash cargoes remain routed at around yearly lows, although grades look to have found a floor amid the gradual improvement in distillate cracks this month. Medium sour grades, including Oman, Upper Zakum and Al Shaheen, were pegged at Dubai swaps +$0.55-$0.65/b, with all three grades seen as interchangeable in terms of MOC convergence.

ICE Brent futures for Jan25 increased $1.89/b from the previous Asia settle to $73.17/b, widening the Jan25 Brent/Dubai slightly to $0.92/b. The EFS also widened with Jan25 heard trading at $1.45-$1.50/b on the Singapore close.

However, brokers said that weaker Asian premiums, along with a narrower EFS this month, have also closed western spot arbs, reducing flows of West African and North American crude, although Asian refiners are still looking at discounted Angolan grades.

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Naphtha margins appeared to have found a floor after a recent decline, with the front month paper crack over Brent rising $1.09/mt on the day to $97.36/mt. Broker data showed the month ahead CFR Japan swaps $14.50/mt higher on the day at $631.50/mt, underpinning most of the gain in cargo price assessed at $631/mt, up $14/mt on the day. BP sold a 1H Feb parcel to Equinor at $630/mt. The deal came as the east-west economics was getting harder for cargoes to move eastward as the spread narrowed $0.50/mt to near a two-month low of $18/mt. The M1/M2 backwardation strengthened $0.25/mt to $3/mt.

Gasoline paper rally extended into the second straight session as the front month 92-octane grade swaps rose $1.60/b to $79.60/b. However, the move was outweighed by a firmer crude market, leaving cracks $0.23/b lower at $6.73/b. Backwardation was unchanged at $0.15/b. On the physical side, PetroChina snapped up two back-end 92 RON cargoes from PTT at $78.60/b, a level that pushed cash diffs further into a discount to paper. Quantum assessed cargoes up $1.17/b at $78.60/b.

A 100kb jet fuel cargo changed hands between Gunvor and Trafigura at $0.30/b premium over paper, keeping the cash diff stable on the day. That left cargo prices drifting $2.53/b higher on the day to $90.28/b as the month ahead paper firmed $2.60/b to $89.90/b. Cracks rose $0.77/b to $17.03/b while the front of the paper curve maintained a backwardation of $0.60/b. East-west spread narrowed marginally to -$23.39/mt, up just $0.70/mt on the day.

Gasoil 10ppm cargoes saw gains, assessed at $90.01/b, up $2.77/b from the previous day. Front-month swaps increased by $2.75/b to $89.25/b, while month-ahead cracks improved by $0.92/b to reach $16.38/b. Backwardation widened slightly as the M1/M2 spread rose $0.05/b to $0.40/b. Meanwhile, the diesel EFS hit its widest level since 15 October as it dropped $2.51/mt to -$24.87/mt.

Marine fuel 0.5% sulfur cargoes firmed, assessed at $544.31/mt with a daily increase of $4.52/mt. Front-month swaps jumped $9.75/mt to $538.25/mt. However, month-ahead cracks eased $0.42/b to $5.14/b. Backwardation softened as the M1/M2 spread declined $0.50/mt to $7.25/mt, while the east-west spread narrowed by $0.25/mt to $46.75/mt. In cash deals, 20KT of marine fuel 0.5% was traded FOB Straits at a $5.00/mt premium to the curve for delivery from Dec 4-8 as Shell sold to Chevron.

High sulfur fuel oil 380 CST cargoes strengthened, assessed at $434.78/mt, up $8.15/mt on the day. Front-month swaps advanced by $8.25/mt to $421.75/mt, though month-ahead cracks edged down by $0.53/b to $6.45/b. Backwardation eased as the M1/M2 spread fell $0.25/mt to $8.50/mt, and the east-west spread narrowed by $0.75/mt to $16.25/mt.