Asia oil/products: Dubai slumps 5% on expiry, diesel cracks near $50/b.

Quantum Commodity Intelligence – Dubai crude oil prices slumped by around 5% on Wednesday's expiry although they made strong gains versus Brent, while diesel cracks maintained the firm upwards momentum.

Dubai cash for October delivery was assessed at $97.85/b for 31 August (1630 Singapore time), down $4.95/b on the day, while the new front-month Nov22 contract retreated by $5.82/b to $95.45/b.

DME Oman futures tumbled $6.89/b on the day to close at $96.23/b for the Oct22 contract, while the new front-month Nov22 contract was trading $95.19/b.

Strong bidding in the partials market on the expiry lifted Dubai prices above Brent, although liquidity remained relatively slim and no further convergences were reported.

The solid Dubai expiry helped boost the key M1/M3 spread (Oct22/Dec22) which closed the month at $5.80/b, the highest in three weeks, although the one-year curve retreated more than $1/b to around $15.50/b.

All eyes turn now to the 5 September OPEC+ meeting, which is likely to be immediately followed by the release of Saudi's OSPs for October.

ICE Brent futures for Oct22 were valued at $97.45/b at 1630pm Singapore, down a hefty $7.08/b from the previous Asia close, as October Brent/Dubai cash flipped to a rare negative of minus $0.30/b versus Wednesday's $1.73/b. Nov22 Brent was assessed $96.29/b, while the Nov22 Brent/Dubai cash spread narrowed $0.43/b on the day to $0.84/b. 

The Nov22 EFS was slightly up at $6.50/b, reflecting the stronger Dubai performance versus Brent.

Products

Naphtha saw Glencore and BP again trading blows in the physical market without finding a price for the 1H November laycan that either could agree on, with Glencore bidding up to $636/mt CFR Japan against BP's offer at $639/mt. Confirming where Tuesday's physical assessment had sat, that left the outright price down $41/mt at $638/mt with the spot crack to Brent up $5.69/mt at -$67.44/mt.

Gasoline offers along the curve at a premium to the swaps price weighed on the cash market, with Total looking to sell a 92 RON cargo for loading 15-20 days ahead at a $1.60/b FOB Singapore premium to swaps and PTT for loading 20-25 days ahead at a $1.80/b premium. Cutting $0.50/b from the physical assessment, that translated into a flat price fall of a chunky $11.62/b to $96.81/b, with the spot crack to Brent falling $5.25/b to just +$0.57/b.

Jet saw Aramco, PetroChina and Unipec as the sole participants in the cash market again on Wednesday, with the latter offering down a cargo for loading 15-19 September to a $3.50/b FOB Singapore premium to swaps pricing around 17 September. That shaved value off the front of Quantum's cash curve and lowered the differential assessment $0.08/b from Tuesday to a $2.71/b premium to the curve. Translating into a flat price down $5.89/b at $139.27/b, that left the spot crack to Brent up $0.48/b at +$43.03/b.

The diesel 10ppm market saw Aramco offer down a cargo for loading 15-20 days ahead to a $1.90/b FOB Singapore premium to the curve while Total bid for 25-30 days ahead cargoes at $2.70/b, with neither side being hit. That was enough to flatten out the structure of the cash curve, however, and averaged out it took $0.05/b from Quantum's cash assessment to leave the physical market assessed at a $2.06/b premium to swaps. That left the 10ppm spot price down $5.14/b at $145.43/b, with the spot crack to Brent up $1.23/b at +$49.19/b.

Marine fuel 0.5% sulfur liquidity continued to dry up in the cash market heading into the month-close, with Trafigura again the sole participant in the window as it sought to offload a cargo for loading 15-19 September at a $3/mt FOB Singapore premium to the curve, 19-23 September at $4/mt, and 23-27 September at $6/mt. That left Quantum's cash differential down another $2.98/mt at $5.63/mt, with the flat price down $57.27/mt at $688.73/mt and the spot crack versus Brent down $1.92/b at +$3.58/b.

High sulfur fuel oil saw Vitol as the sole bidder in the 180 CST window, looking for a cargo loading 15-20 days ahead as it bid up as high as $4/mt FOB Singapore without finding a seller. Total was on the other side of the market, offering at $8/mt over swaps for cargoes loading 15-30 days ahead. The best bid left Quantum's cash differential up $0.39/mt from Tuesday at a $4.08/mt premium to the curve and gave a flat price down $38.25/mt at $452.75/mt. For 380 CST, PetroChina and Trafigura traded bids and offers but with a wide spread of $3.50/mt versus $9/mt. That left the cash assessment at $4.25/mt and translated into a flat price down $39.41/mt at $431.59/mt.