Asia oil/products: Dubai rallies on expiry, distillate cracks fall

Quantum Commodity Intelligence - Dubai crude stormed higher on the final trading day of September partials, comfortably outpacing Brent gains and blowing out the backwardation. For distillates, the week's rally in refining margins finally ran out of steam and gave back some of the week's gains.

Dubai cash for September delivery was assessed at $107.24/b for 29 July (1630 Singapore time), up $2.24/b from the previous session, while the new front-month Oct22 contract was down $0.31/b to $100.81/b and viewed as a more realistic guide to market dynamics.

The DME Oman futures contract went in the opposite direction, with the new front-month Oct22 contract closing slightly lower at $101.14/b but maintaining a small premium to the corresponding Dubai cash price.

A lively expiry on September Dubai partials saw the market aggressively bid by Shell, Gunvor, Mercuria and Petrochina before buyers stepped in, initially at $107.20/b. Only one further convergence was reported though, with Reliance declaring a cargo of Oman to Mercuria.

Dubai also regained further ground on ICE Brent futures, with the Sep22 North Sea contract at $108.72/b at the Singapore 1630 close, a gain of $0.86/b from the previous Asian settle.

The September Brent/Dubai cash spread narrowed $1.38/b on the day to +$1.48/b, although the October Brent/Dubai EFS was around $0.40/b higher on the day at around $8.40/b.

Reports that Japanese utilities may increase the oil burn are set to give a lift to low-sulfur grades heading into the winter, likely targeting Indonesian light crudes.

Meanwhile, Murban futures trading on IFAD also rallied strongly on the expiry, as the Sep22 contract closed out at $108.68/b, up more than $2/b on the day. Current loading delays at Fujairah were said not to be having any impact on futures prices.

Products

The naphtha cash market saw only buy-side interest from BP for shipment 1H September as cargoes were bid as high as $762/mt CFR Japan without finding a seller. In a quieter-than-usual session for the paper market, that left the flat price down $11.75/mt from Thursday to end the week at $762.25/mt. The spot crack to Brent was marked $9.85/mt lower at +$5.28/mt.

Gasoline had plenty of sell-side interest in the 92 RON physical market, although offers from PetroChina, PTT, Mercuria, and Trafigura found no buyers. Vitol was heard bidding for 95 RON without finding a seller. With that, moves in the paper market meant the 92 RON flat price was up a slim $0.18/b to end the week at $115.22/b FOB Singapore.

The jet flat price was marked $1.63/b lower than Thursday at $134.71/b FOB Singapore as moves in the paper market weighed on the assessment. In the cash market, it was another quiet session that saw both sides of the market unwilling to show their hand for fresh cargoes. The spot crack to Brent ended the week giving back some of the week's gains, sliding $1.37/b to +$31.44/b.

Diesel trade was thin Friday, with only PetroChina and Aramco in the market on the sell-side in Asia. A bid from Trafigura for a 10ppm cargo loading 15-20 days ahead was heard at $1.66/b FOB Singapore over the curve, equivalent to $142.86/b. That lifted the cash curve slightly, with the differential assessment put at $1.37/b and giving an outright down $2.13/b from Thursday at $142.57/b. The spot crack to Brent was down $1.87/b at +$39.30/b.

Marine fuel 0.5% sulfur saw a quiet day for the cash market, with only Trafigura and Shell seen in the window. Their offers were well above where prevailing value was deemed to sit and Quantum's cash differential assessment halted its recent slide as it remained at $48.20/mt. For the outright price, that meant a $9/mt slide to $807.90/mt FOB Singapore, with the spot crack to Brent down $1.04/b at +$13.82/b.

A high sulfur fuel oil deal was booked for loading 25-30 days ahead in the 380 CST market, as PetroChina booked a cargo at a $6/mt FOB Singapore premium to swaps. That lifted the curve, adding almost $3/mt to Quantum's assessment and putting the flat price up $2.98/b at $480.14/b by the end of the day.