Asia oil/products: Iran return dampens crude sentiment, cracks rebound

London (Quantum Commodity Intelligence) – Crude oil in Asia dropped for the third consecutive day as the likelihood of a deal with Iran boosting exports continued to dampen sentiment.

Dubai cash for July delivery was assessed at $65.00/b on May 20 (1630 Singapore time), down $1.09/b from Wednesday's Singapore close.

The cumulative price fall over three days is $3.38/b, or 5%, according to Quantum data.

DME Oman futures for July settled $65.12/b at the Asia close, down $1.09/b from Wednesday.

A deal with Iran could see crude and condensates exports ramp up by 1.5 million within a three-month period, say sources.

Cash Brent (BFOE) for July was assessed at $66.64/b, down $1/b, while the Brent/Dubai cash reversed the recent trend, widening by $0.09/b to $1.64/b.

Premiums for July spot crude are holding up well so far, with a Qatari Al Shaheen tender heard awarded at around Dubai swaps +$1.70/b, while sources said Totsa was again active in the Dubai partials market, picking up another cargo of Oman.

Products

Gasoline cracks rebounded on Thursday, clawing back all of the lost gains from last week as nearby swaps rose and steepened the backwardation, shrugging off higher stocks in Singapore. The spot crack was valued at $6.80/b with the front month backwardation rising to $0.53/b from $0.41/b a day earlier. Spot tonnes for 92 RON were assessed at $73.44/b FOB Singapore, with 95 RON $1.60/b higher.

Naphtha cracks rose accordingly, with spot cracks rising to the highest level in a week at just under $99/mt. CFR Japan spot was assessed at $588.75/mt, down $5.25/mt on the day.

Distillate cracks continued to rally, tracking European cracks higher. A spot deal for 10ppm diesel was heard at a premium of $0.15/b over June swaps. The spot crack was up $0.27/b to $6.80/b.

Jet kero cracks also firmed, rising $0.08/b to $4.08/b for spot cracks basis FOB Singapore. One deal was heard at a discount to June swaps of $0.20/b, a lower differential, but the overall feel was bullish with seven-day average of US passengers at continuing to set fresh highs each day.

Higher sulfur fuel oil cracks rose $1/mt, arresting a five-day decline, with spot 3.5% 380cst climbing to -$9.36/mt from -$10.47/mt. Marine fuel 0.5% sulfur spot crack rose $0.42/b to $1.80/b. Cash differentials were heard pegged at more than $2/mt lower than underlying swaps.