Asia oil/products: Dubai posts five-week high, jet catches up to diesel

Quantum Commodity Intelligence - Benchmark Dubai crude increased for a fifth consecutive session Monday, catching up with Friday's Brent rally, while jet fuel caught up with diesel, narrowing the regrade.

Dubai cash for December delivery was assessed at $96.55/b for 10 October (1630 Singapore time), up $2.20/b on the day and a five-week high, while the Dec22 DME Oman futures contract was up $2.48/b at $96.72/b.

Last week's decisive action from OPEC+ will see steep cuts across the region for next month, while healthy buying interest from China was also seen underpinning prices.

Despite the reductions, Saudi Aramco has informed customers in Asia they will receive full contractual volumes in November. Energy consultancy FGE expects Saudi oil to cut output by around 550,000 bpd next month.

ICE Brent futures for Dec22 were valued at $97.40/b at 1630pm Singapore, up $2.77/b from the previous Asia close. The Dec22 Brent/Dubai spread widened to $0.85b, while the Dec22 EFS was also higher at $6.50/b on the Asian market-on-close.

In the latest OSP release, Iraq slightly lifted differentials for Asia. SOMO set the OSP for Basrah Medium, its primary export grade, to Asia at Platts Dubai/Oman +$1.70/b, compared to +$1.40/b for October, while Basrah Heavy was raised to -$2.20/b from -$2.50/b.

Products

Naphtha was offered down to $702/mt by BP for 2H November and by Trafigura for 2H December, which pulled values lower across the curve. Naphtha cargoes were assessed $1/mt lower on the day at $698/mt, and cracks fell $2.77/b to -$18.48/b.

Gasoline moved higher on Monday but fell back into negative territory against crude as concerns build on regional oversupply. Liquidity edged up from a thin Friday session, as Aramco bought a single 92 Ron cargo from Petrochina at $96.50/b at the front of the window, while Vitol offered down to $94/mt further out. Prices were assessed at $95.23/b, up $0.82/b on the day, while cracks fell $1.84/b to -$1.68/b.

Jet fuel cargoes in Singapore caught up with the tightening diesel market, squeezing the November regrade back down by $0.75/b to $7.45/b as November swaps rose to a fresh one-month high of $129.65/b. That meant that jet cracks were down to a lesser extent compared to diesel, siding $to $34.24/b as Brent rose at the start of the week. There were no physical indications with the cash differential kept unchanged at $0.50/b equivalent to a flat price of $130.81/b.

Liquidity in the diesel 10ppm cargo window picked up as BP continued to bid prompt dates higher. Both Shell and Vitol each sold a 175,000-barrel cargo to BP at $6.80/b for Oct 25-29 loading, equivalent to a flat price of $148.28/b. At the same time, Unipec bid a cargo for similar dates at $7.20/b. That pushed up the cash differential for a seventh straight session to $6.58/b as the east-west arb jumped after ongoing strikes in France knocked out two-thirds of its refining capacity. Yet with Oct swaps a touch lower on the day, the flat price was up only marginally on the day at $147.14/b, while cracks gave back some gains as Brent rose. The crack slid $2.6/b to $50.23/b after rallying over $20/b last week. The east-west EFS for November fell to -$86.54/b – its widest since late March and indicating firm import demand into France.

Marine fuel 0.5% sulfur saw a sole cargo booked during the trading window as Gunvor bought from Shell for 4-8 November at a $21/mt FOB Straits premium to nearby swaps. That deal shaved $0.06/mt from Quantum's cash differential as bids and offers along the rest of the cash curve were far off where value sat, leaving the outright price up $14.70/mt at $730.48/mt. The spot crack to Brent was down $0.53/b at +$8.56/b.

High sulfur fuel oil cargoes traded twice during Monday's window, with Trafigura buying a cargo from Vitol for 4-8 November at $398/mt FOB Straits and again from Sinopec for 5-9 November at a $1/mt premium to swaps. That meant the cash differential continued to climb, gaining another $1.09/mt to $1.44/mt and left the flat price up $11.67/mt at $398.08/mt. The 180 CST market was far quieter, with Sinopec lowering offers for the 25-29 October laycan down to flat to swaps without finding any buy-side interest. That left the differential steady, with the outright down $10.47/mt at $418.63/mt.