Asian oil product crack monthly averages: Distillates rise, gasoline falls
London, (Quantum Commodity Intelligence) – Refining margins for distillates rose sharply over the course of May versus a month earlier, Quantum data shows, with monthly averages up 50% for jet kero and 30% for diesel.
Buoyed by rising air travel in the US and Europe, jet paper cracks FOB Singapore rose from an average of $2.52/b in April to $3.79/b in May, as the number of passengers boarding aircraft in the US rose more than 20% over the month with flight numbers in Europe increasing by the same percentage.
The front month crack hit a peak of $4.41/b on May 20, before sliding back to $3.21/b by May 31 – the lowest level since April due to a slower than expected recovery in India and Japan from a second wave of Covid-19.
10ppm
Diesel saw a similar picture, although the recent decline has been less brutal, with demand for trucking heavy goods less impacted by the pandemic.
Average front month cracks for ULSD (10ppm) FOB Singapore rose from an average of $4.41/b in April to $5.86/b in May, according to Quantum data.
Cracks hit a monthly peak of $6.76/b on May 20, as crude oil prices slumped on fears of a glut of Iranian supply, but have since tailed off to $5.71/b.
Light ends
But as distillates rose over the course of the past two months, gasoline fell marginally with feedstock naphtha heading the other way on stronger petrochemical demand.
Front month paper cracks for RON 92 FOB Singapore fell to $6.20/b over the course of May compared with $6.70/b over April in what was an extremely volatile month that was punctuated by two days of sharp falls triggered by fears over demand destruction in India, Japan and Southeast Asia.
The prospect of a return of the US driving season saw front month cracks briefly hit a peak of $7.05/b in early May, before a rise in outbreaks and travel restrictions across Japan and Southeast Asia triggered a slump to $4.81/b.
Lower crude initially helped propel the crack higher, but news that Japan had extended its state of emergency, Malaysia had initiated a new national lockdown and Vietnam had identified a new variant of concern hit cracks on May 31, with the front month being hammered to $5.31/b.
The spot crack was hovering above multi-week lows.
For naphtha, it was a different story with front month cracks rising from $91/mt in April to $95/mt in May.
Residual
With fuel oil stocks in Singapore surging to a four-year high, cracks retreated sharply over the course of May, with 3.5% 380 cst FOB Singapore falling from -$6.75/b in April to -$9.12/b in May.
Marine fuel 0.5% cracks fell from $4.83/b to $2.85/b over the same period as the prospect of an increased supply of sour crude dovetailed with lower demand and a shift to bunkering in China.