Asia oil/products: Dubai loses ground to Brent, distillate cracks up

Quantum Commodity Intelligence - Asian crude oil prices continued to slide Wednesday as benchmark Dubai lost further ground to Brent, while middle distillate cracks halted their recent slide.

Dubai cash for December delivery was assessed at $92.90/b for 12 October (1630 Singapore time), down $0.80/b, while the Dec22 DME Oman futures contract was down $0.75/b at $93.03/b.

Fears over Q4 demand and another Covid-led slowdown from China also weighed on market sentiment as the key M1/M3 spread (Dec22/Feb23) eased around $0.40/b to $5/b, while medium sour flagship grades, including Oman, Upper Zakum and Al Shaheen, were pegged at Dubai swaps plus low $5s/b.

In the latest OSP release, Kuwait sets its November Kuwait Export Crude (KEC) at $4/b over the average of Platts Dubai and DME Oman quotes, compared to $3.80/b for October.

ICE Brent futures for Dec22 were valued at $94.60/b at 1630pm Singapore, unchanged from the previous Asia close, as the North Sea marker outpaced Asian benchmarks. The Dec22 Brent/Dubai spread widened to a five-week high of $1.70/b, while the Dec22 EFS was up around $0.40/b to $6.70-6.75/b on the Asian market-on-close.

Gasoline cracks rebounded from the previous day's lows, but oversupply concerns persist and refining margins remained rooted in negative territory. 

Products

Naphtha prices fell and cracks slipped, as the curve narrowed on a tight bid/offer spread. Cargoes were bid up to $680/mt on 1H December Laycan by BP and offered down to $679/mt for the second-half of December by Trafigura. No trades were completed and naphtha CIF Japan was assessed down $7/mt at $679.50/mt. Cracks slipped $0.70/b to -$17.61/b.

Gasoline cracks rebounded on Wednesday, but refining margins remain in negative territory on the benchmark 92 Ron grade on oversupply and lacklustre demand. PTT sold a 92 Ron cargo to Vitol at $92.20/b on MW dates, and a 95 Ron cargo to Sietco at $95.7/b on the front-end. Quantum assessed both 92 Ron and 95 Ron cargoes in line with the trades, up $1.20/b and $1.55/b, respectively, on the day.

Jet markets saw yet another quiet session, with no fresh buy or sell indications from the market. Paper was busier, however, with PetroChina a seller of the November regrade twice at $8/b. That helped lift the outright $2.32/b from Tuesday to $123.44/b, with the spot crack to Brent up $2.40/b at +$29.48/b. In Fujairah, weekly data showed middle distillates down for a second week, falling 10% to a three-week low of 3.9 million barrels.

Diesel saw another quiet session, with BP the sole buyer in the 10ppm market as it lifted its bids for cargoes delivered 27-31 October to $3.10/b FOB Straits. Unipec was the only seller and offered similar load dates down to $6.80/b. On the outright, prices were up $0.62/b at $137.70/b. The spot crack to Brent was up $0.70/b at +$43.74/b.

Marine fuel 0.5% sulfur paper markets were quiet but cash cargoes traded three times for delivery 27-31 October as Gunvor bought from Trafigura at a $17.50/mt FOB Straits premium to swaps and Sinopec paid $700/mt to Vitol. Quantum's cash differential fell $1.15/mt to $19.31/mt, which left the flat price down $10.21/mt at a one-week low of $696.83/mt. The spot crack to Brent was down for a fourth session, losing another $1.40/b to hit a one-week low of +$7.03/b. Fujairah residual fuel stocks were up 6% last week to a fresh 14-month high of 13.4 million barrels. 

Vitol was an aggressive seller at the back end of the high sulfur fuel oil 380 CST cash window, offering down to $374/mt FOB Straits. That weighed on Quantum's cash differential assessment, which was marked $0.84/mt lower at $0.22/mt and gave a flat price down $3.09/mt at $375.33/mt. 180 CST was even quieter, with just Trafigura and Mercuria in the market and far apart in where they saw value. That left Quantum's differential steady at a $3.77/mt discount to swaps and gave a flat price down $2.50/mt at $398.63/mt.