Asia oil/products: Dubai crude up sharply, diesel cracks rise again
London (Quantum Commodity Intelligence) – Crude oil in Asia rebounded strongly Monday, catching up with western benchmarks after Friday's Brent rally, with keen demand seen for Middle East medium sour crude.
Dubai cash for July delivery was assessed at $67.13/b on May 17 (1630 Singapore time), up $1.83/b from Friday's Singapore close, while DME Oman futures for July settled at $67.25/b at the Asia close, up $1.86/b from Friday.
The July/Aug Dubai widened to $0.75/b, the widest front-month spread since late February.
Cash Brent (BFOE) for July was assessed at $68.90/b, up $1.75/b.
The Brent/Dubai cash spread narrowed to a fresh five-week low of $1.77/b, with Dubai making further gains versus Brent.
Two more cargoes of Upper Zakum were delivered against Dubai following convergence in the trading window, while Upper Zakum was bid higher at Dubai swaps +$1.10/b.
Products
Product cracks bar fuel oil mostly moved higher, but as a percentage to Brent only diesel showed a big gain on Monday as low supply from India pushed cracks up.
For 10ppm diesel, there were six trades heard that placed value somewhere between $74.90 and $75.20 for loading dates between 15-30 days out. That pushed the cash differential higher and the cracks to a 13-month high of $6.25/b for June.
In the jet kero market there were no deals heard, but the market edged higher with swaps nudging higher largely to reflect firmer crude. Cracks for June remain below $4/b as concerns over European travel took the edge off last week's bull run.
Gasoline cracks rebounded alongside the physical, although prices only partially recovered Friday's huge losses. One deal was heard for 92 RON at $73.50/b with three others for 95 RON that placed value at $75.10/b and widened the spread between the two grades to $1.60/b.
Naphtha cracks fell marginally, although no physical deals were heard. As a percentage to Brent, naphtha was weaker as firmer crude should have led to firmer cracks.
For fuel oil, cracks fell further with 3.5% 380cst pushing close to -$10/b versus Brent as expected demand from utilities in the Middle East has failed to emerge. Marine fuel 0.5% cracks only marginally, leaving the June swap spread between 3.5% and 0.5% at $114/mt, up $2/mt on the day and making it more profitable for shipowners with scrubbers to burn fuel.