Asia oil/products: Dubai M1/M2 spread narrows sharply, HSFO crack recovers
London (Quantum Commodity Intelligence) – Oil markets reopened in Asia Thursday after the previous-day's Singapore holiday, with outright prices falling while the front-month M1-M2 structure narrowed sharply.
Dubai cash for July delivery was assessed at $66.37/b on May 27 (1630 Singapore time), down 0.96/b from Tuesday's Singapore close, as the buying interest evaporated from the July market.
The July/August had been in the $0.70-$0.80/b range over the past week, but tumbled sharply to $0.25/b Thursday, amid talk of a potential overhang of July barrels, including from Abu Dhabi.
DME Oman futures for July settled $66.45b at the Asia close, down $0.40/b from Wednesday's close, while July/August flipped from +$0.28/b to -$0.11/b as the Dubai weakness spilled over into the Oman structure.
Cash Brent (BFOE) for July was assessed at $68.41/b, down $0.43/b from the Tuesday's Asian close, as the Brent/Dubai cash widened back out to $2.04/b compared to $1.51/b on Tuesday.
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Asian paper gasoline cracks closed in on a four-day high as Singapore stocks fell, but only marginally.
Front-month paper cracks versus August cash Brent for 92 RON spec were $6.24/b by 1630 Singapore time, up $0.21/b on the day and just shy of a four-day high. One physical deal was heard at $74.70/b, leaving the cash differential flat at $0.25/b above swaps.
Two naphtha deals were heard executed – one for second half July at $608/mt and another at $602/mt for first half August, leaving the assessment at $603/mt. The spot crack was broadly stable on the day at $100/mt.
Nearby middle distillate cracks eased slightly and cash differentials were seen weaker, despite a chunky 8% drop in Singapore inventories.
No deals were heard by jet kero cracks were marked at $3/b for June, down from $3.06/b on Tuesday, while 10ppm cracks were seen at $6.19/b, down $0.17/b over the same time period.
Fuel oil cracks rebounded as stocks fell back from a four year high. With Singapore stocks down also 8%, fuel oil cracks for higher sulfur improve $1/b on Tuesday's level with marine fuel 0.5% cracks firming $0.50/b higher to a three day high.
Cash differentials were still marked at $3/mt below the curve for 380cst and 0.5% marine fuel, indicating nearby weakness is still dominating the complex.