Asia oil/products: Middle East crude hits new high, gasoline rebounds
London (Quantum Commodity Intelligence) – Crude oil in Asia continued the firm uptrend Tuesday, as firm Middle East demand and the stronger global trend underpinned the rally in terms of outright prices and market structure.
Dubai cash for July delivery was assessed at $68.43/b on May 18 (1630 Singapore time), up $1.25/b from Monday's Singapore close, taking the two-day gain to over $3/b, or 4.5%.
DME Oman futures for July settled $68.43b at the Asia close, up $1.18/b from Monday.
Middle East sour crude benchmarks Dubai and Oman were at post-pandemic highs, according to Exchange and broker data.
Cash Brent (BFOE) for July was assessed at $40.04/b, up $1.75/b, as the Brent/Dubai cash narrowed to $1.66/b.
Two more cargoes of crude were delivered against Dubai following convergence in the trading window, one Dubai and one Oman, while Upper Zakum was bid higher at Dubai swaps +$1.25/b.
Products
Distillates were flat, light ends were up and high sulfur fuel oil was down, indicating gasoline was leading the barrel on Tuesday.
Gasoline cracks, particularly for spot, rebounded on Tuesday amid falling Indian Covid-19 infections and a firmer European complex ahead of easing restrictions in the west, but margins remain down on the past seven days.
The front month 92 RON crack was pegged at $5.53/b, up $0.34/b on the day versus August cash Brent.
But the biggest jump was for spot, where cash differentials flipped from negative to positive and were marked at $5.53/b after a spot deal was heard for $75.50/b FOB Singapore.
The June-July backwardation is starting to steepen, with the spread now at $0.37/b versus just $0.15/b on Friday, indicating nearby strenght in the complex.
Naphtha cracks rebounded too, with front month pegged at $96/mt versus $93/mt a day earlier. No physical deals were heard and swaps outpaced crude.
Distillate cracks were broadly unchanged with deals for both 10ppm diesel and jet showing marginal changes in the cash differential and swaps tracked crude higher.
One physical deal for jet kero was heard at parity to the underlying swaps, while 10ppm diesel was traded at a $0.30 premium to June swaps.
Fuel oil cracks painted a familiar picture - sinking for the fourth consecutive day as crude prices rallied.
High sulfur cash differentials are now more than $2/mt below the underlying swaps curve, leaving the market in a steepening contango of -$1.27/mt for June/July, whereas it was in backwardation of $0.50/mt a week ago.
Marine fuel 0.5% remains in a steep contango even though underlying diesel prices are backwardated. The June crack fell to $1.46/b versus Brent on a 6.9 conversion, its lowest level in months.
