Asia oil/products: Prices continue retreat, distillate/gasoline cracks ease
London (Quantum Commodity Intelligence) – Crude oil in Asia dropped for the fourth consecutive day on Friday on the possibility of sanctioned Iranian barrels coming back onto the market, plus the demand slowdown from India.
Dubai cash for July delivery was assessed at $63.20/b on May 21 (1630 Singapore time), down $1.80/b from Thursday's Singapore close. The cumulative price fall over four days is now over $5.00/b, or 7.5%, according to Quantum data.
Cash Brent (BFOE) for July was assessed at $64.82/b, down $1.82/b from the previous-day's Asian close.
Physical markets are, however, holding up reasonably well although premiums are slightly off from earlier in the week.
A third round of July-loading ESPO tender cargoes from Russia's Surgut have been awarded at premiums of Dubai swaps between $3/b and $3.10/b, compared to a near one-year high of +$3.50/b on the second tender earlier this week.
Meanwhile, a spot cargo of Upper Zakum cargo was heard done at around Dubai swaps +$1.30/b.
Products
Cash differentials for naphtha remained unchanged on Friday amid thin liqudity in the market. Cracks fell sharply, with the front month June swap versus August cash Brent at $91.63/mt - the lowest since Monday as swaps dipped.
Gasoline cracks fell back on Friday after chalking up four days of successive gains. One 95 RON deal was heard at parity to swaps and 92 RON was marked at a $0.30/b cash differential on selling interest. Front month cracks fell back to Wednesdays levels at $6.03/b. It would be easy to point to rising infections in Asia for the fall, but that has been known for a while and sources say much of the focus now will be on vaccination, not infection rates, as a gauge for demand this year.
Jet kero cracks also fell for the first time in six days, unable to resist the pull of lower crude, but also stalling demand. US passenger data shows growth in the rolling seven-day average is starting to tail off at 1.6 million per day. Cash differentials were broadly stable but swaps fell.
A similar picture was in place for 10ppm diesel, where cracks fell back to Wednesday's levels, but they still remain sharply up on the week on lower crude and higher European demand. Two spot trades were heard at a $0.20/b premium over swaps.
Marine fuel bucked the trend of falling cracks on Friday as the swaps curve moved marginally higher on a correction versus crude and the cash differential fell to $2.50/mt. Higher sulfur fuel cracks were weaker.
