Asian refining margins move higher on week as crude rises 3%
London, (Quantum Commodity Intelligence) – The relative value of all main refined products in Asia moved higher in the week ending 4 June, as all main crude grades hit a 2-year high.
Product cracks tend to trend higher as crude prices rise, but even as a percentage of crude, all main products firmed, with the exception of jet kero, which flatlined.
The biggest mover over the past week was high sulfur fuel oil, with the front-month crack, or refining margin, rising to -$7.94 from -$9.24/b basis FOB Singapore and versus cash Brent, and with the ratio to Brent firming from 86.5% to 89%.
Higher cracks in fuel oil came despite rising stocks of residual fuels in both Fujairah and Singapore, which hit four- and three-week highs, respectively.
The rise in higher sulfur cracks, however, masks what is still a structurally weak complex, as the front-month crack remains only at a five-week high and still lower than the average in April 2021.
Higher-sulfur cracks also pulled up 0.5% fuel oil, with the front-month crack rising from $2.77/b a week ago to $4.11/b for a 6.9 density and basis FOB Singapore.
The ratio versus crude rose 1.5 percentage points, meaning the value of marine fuel versus Brent is at 108.89% for July.
A drawdown in Japanese stocks of naphtha helped the crack for light ends firm with naphtha hitting a four-day high of $101.5/mt on Friday basis CIF Japan –the loftiest level for two months and up $2/mt on the week.
That helped gasoline cracks recover, which had initially dipped on more Covid-19 outbreaks across southeast Asia earlier this week.
The RON 92 crack was marked at $5.96/b for July on a FOB Singapore basis versus cash Brent, up $0.56/b on the week and increasing its crude ratio by 0.6 percentage points to 108.3% of crude.
Middle distillate gains, however, were more modest, with the 10ppm July crack rising $0.51/b to $6.51/b, the highest in seven sessions.
And jet cracks for July were down on the day at $3.97/b, but up on the week by $0.01/b as European travel was thrown into doubt for the British population.
