Asian crude falls for third day, distillate cracks rise
London (Quantum Commodity Intelligence) – Middle East crude oil prices retreated for the third successive day Thursday, as rising coronavirus cases in India, OPEC+ compliance concerns and planned crude export hikes added to the bearish sentiment.
Dubai cash for June delivery was assessed at $62.21/b on April 22 (16.30 Singapore time), down $1.49/b from Wednesday's Singapore close, while DME Oman futures for June settled $62.65/b at the Asian close, down $1.20/b.
Cash Brent (BFOE) was assessed at $64.83/b, down $1.32/b versus Wednesday's Singapore close, as the North Sea benchmark proved more resilient. The Brent/Dubai EFS for June held around 16-month highs above $3.54/b, highlighting the relative Dubai weakness.
Much of India remains under restrictions, fueling fears of a sharp downturn in oil demand, while expectations of a third lockdown in Japan also dampened market outlook. Elsewhere, reports that Iraq was lagging behind on production cut commitments is likely to be a major talking point at next week's OPEC+ meeting.
Products
In the products market, light ends fell versus crude, while distillate cracks rose on EIA data that showed greater than expected gasoline demand.
Some Korean buying was rumoured to take place for June at a $9/mt premium to the swaps market - levels that were broadly similar to Japanese purchases seen earlier in the week.
No physical deals were heard, but the east-west spread for Q3 widened from $11.75/mt to almost $16/mt over the course of the week indicating arbitrage opportunities were likely increasing.
Several deals were heard for 95 RON gasoline at $73.40-73.50/b FOB Singapore for mid-May loading, indicating sluggish demand.
RON 92 cracks fell around $0.20/b down the curve versus cash June.
Jet kero cracks firmed on Thursday down the curve.
No spot deals were heard, but May swaps jumped from $2.48/b to $2.93/b FOB Singapore indicating greater demand.
Distillate cracks firmed with the 10ppm swaps rising 5%, or around $0.20/b down the curve.
No deals were reported and the cash differential remained at $0.37/b to the underlying swaps.
Fuel oil cash differentials to swaps eased to $0.75/mt for Marine Fuel 0.5%. Despite that the cracks moved higher versus Brent to $10.47/b. Highers sulfur fuel oil cracks versus Cash Brent fell back around $0.40/bl.