Asian refining margins edge lower on week as crude rises 7%

London, (Quantum Commodity Intelligence) - Asian refining margins were steady on the week, despite a sharp 7% rise in the value of crude as fears over an immediate injection of Iranian supply receded and the expectation that US crude exports would slow.

With front month cash Brent rising 7% on the week to $69.60/b by 16.30 Singapore time, cracks have stayed broadly flat, meaning profitability as a percentage of crude has fallen.

And with the spread between WTI and Brent narrowing from over $3/b to under $2.70/b for June loading, there are fears that flows of US crude would slow.

Gasoline cracks rose $0.30/b on the week to $6.30/b FOB Singapore, driven higher by US demand as the driving season gets underway, widening the spread between RBOB gasoline and Eurobob more than $1/mt to $27.25/mt, according to Quantum data.

Naphtha cracks, meanwhile, have also risen from -$1/b to -$0.84/b (from $91/mt to $99/mt) CIF Japan, driven also by firmer gasoline as the east-west spread was static for June at around $12/mt.

But while the light ends firmed, middle distillates such as jet and diesel chalked up the first week-on-week fall for months as refinery runs pick up in the US.

After a bull run for months, diesel 10ppm cracks for June versus August Brent at $5.85/b down from $6.46/b last Friday.

The cracks shrugged off an 8% draw in Singapore distillate stocks and it was a similar picture for jet kero, with June cracks falling almost 20% on the week from $4.09 to $3.30/b and the east-west spreads staying largely static – at -$11.30/b.

The US government warned people not to travel to Japan as much of the country remains in lockdown and is exporting jet fuel.

Finally, residual fuel cracks were marginally weaker, with higher sulfur at -$10.14/b from -$9.91/b, with marine fuel falling to $2.06/b from $2.36/b last Friday using a 6.9 density factor.

Cracks had started to recover over the previous week on delays to the return of Iranian heavy sour supply.