Asia oil/products: Dubai eases,  jet structure collapses, arb open

Quantum Commodity Intelligence - Middle East crude prices Monday started the week slightly lower, while the backwardation in the jet market collapsed and opened the arb west.

Dubai cash for November delivery was assessed at $90.35/b for 19 September (1630 Singapore time), $0.67/b lower on the day, while DME Oman futures were down $0.63/b at $90.37/b for the Nov22 contract.

However, demand was seen as healthy for November barrels, while an internal OPEC report showing the wider OPEC+ alliance missed production targets in August by a combined 3.58 million bpd underpinned the market structure.

Only Middle East producers are reaching target, including Kuwait, which on Sunday said it currently produces more than 2.8 million bpd, in accordance with its quota.

Dubai partials were last traded at $90.35/b, setting the day's assessment, while Oman partials were bid at $90.40/b.

Iran released its OSPs for October, cutting Iranian Light to Asia by $3.95/b to Platts Dubai/Oman +$5.55/b, while Heavy was down $4/b to +$4.20/b, although traders said Iranian barrels typically sell at a discount to the OSP.

ICE Brent futures for Nov22 were valued at $90.30/b at 1630pm Singapore, down $0.27/b from the previous Asia close and narrowing the Nov22 Brent/Dubai cash spread to minus $0.05/b. The Nov22 EFS was trading around $0.30/b higher at $6.06/b on the Asian market-on-close.

Products

BP was the sole participant in the naphtha cash market, lifting its bid levels for a cargo shipping 2H November to $663/mt CFR Japan without finding any sell-side interest. That translated into an outright price up $1/mt from Friday at $663.50/mt, while the spot crack to Brent crept further into positive territory as it was up another $4.45/mt at +$7.76/mt.

Gasoline saw Vitol book a cargo of 92 RON from PetroChina for loading 4-8 October at a $1.20/b FOB Singapore premium to nearby swaps. Bids from Trafigura at $1.28/b over swaps for 100,000-barrel cargoes loading 10-14 and 15-19 October were the best-priced on the buy-side. The deal pegged value and left the flat price down $0.88/b from Friday at a fresh seven-month low of $87.45/b as the spot crack versus Brent came off another $0.41/b to -$2.01/b, which is the lowest its been since December 2020.

Jet fuel was offered at a whopping $2.70/b over swaps, although there was no buying interest versus that Aramco bid. Balance month swaps are crashing, betraying the weakness in the market as India and China ramp up exports and the arb west is now open. Some brokers pegged the balmo/Oct time spread at negative. The cash differential was unchanged at $0.21/b above swaps, equal to $109.43/b. That left the crack broadly unchanged.

Diesel cracks improved for the second straight day, albeit marginally, amid confirmed data that showed India and China has ramped up exports of both diesel and jet. Swaps broadly tracked crude, flatlining against a slightly weaker barrel. In the cash markets, only bids were seen with Vitol, Totsa and Petrochina showing bids of around $0.80-1.20/b above swaps. That did not test the $1.64/b cash differential from Friday and 10ppm cargoes were assessed at $117.05/b. 0.25% gasoil was bid at $3.30/b below swaps with 500pm around $1/b higher.

Marine fuel was offered in double digits over swaps, although there were no bids seen. The cash differential was marked at $2/b, equal to $647/mt FOB Singapore, up $8.59/mt on the day. The crack is now at a three-week high as the surplus erodes in Singapore. HSFO 380cst was bid and offered in a tight range, indicating value at $371.50/mt FOB Singapore, down $9/mt on the day and the crack was slightly weaker.