Asia oil/products: Middle East crude in demand, margins improve on distillates
London (Quantum Commodity Intelligence) – Crude oil in Asia retreated sharply Wednesday on outright price, but the Dubai market held firm again in terms of relative values and structure.
Dubai cash for July delivery was assessed at $66.09/b on May 19 (1630 Singapore time), down $2.25/b from Tuesday's Singapore close, effectively wiping out the gains of the previous two days.
DME Oman futures for July settled $66.21/b at the Asia close, down $2.22/b from Tuesday.
Dubai partials trading remained active with another cargo of Oman delivered against Dubai, following convergence in the trading window.
Cash Brent (BFOE) for July was assessed at $67.64/b, down $2.40/b, as the Brent/Dubai cash narrowed another $0.10/b to $1.55/b.
In the light sweet crude market, Surgut awarded a second round of July-loading ESPO cargoes via tender. Premiums of up to Dubai swaps +$3.50/b heard, the highest since summer 2020, as firmer distillate cracks underpin the light crude market.
Products
Distillate and gasoline cracks rose on Wednesday, with naphtha falling and fuel oil moving sideways, although as a percentage it was stronger versus falling crude.
Distillate cracks rose $0.20/b, with jet kero and 10ppm diesel climbing consistently on anticipation of a return of European demand for both products.
With Europe easing restrictions, 10ppm diesel cracks for June versus August cash Brent rose to $6.46/b with the front month swaps slipping further into backwardation at $0.14/b, a sign of growing strength.
One deal was heard, with spot tonnes priced at a $0.30/b premium to June swaps, equivalent to $74.17/b.
Jet kero cracks moved in tandem, with June at $4.13/b. No deals were spot tonnes were pegged at flat to the underlying swaps curve.
92 RON gasoline cracks rose for the third consecutive day on Wednesday, alhtough with June at $5.88/b they remained shy of last Wednesday's high of $6.22/b.
The front month crack spread flipped to backwardation, albeit a marginal one of -$0.03 versus backwardation of $0.10/b a day earlier. Three deals were heard pegging spot tonnes at $73.80/b and one deal of 95 RON equivalent to $75.10/b.
Prompt fuel oil cracks improved marignally, with Q3 softening slightly and indicating slightly stronger demand. There were no spot deals heard and cash differentials were pegged all below -$2/mt, leaving the market still in contango and marine fuel at a chunky $120/mt premium over HSFO.
Marine fuel is caught between rising diesel cracks and lower high-sulfur fuel oil cracks leaving the FOGO at above $70/mt.