Crude higher as Saudi releases OSPs, Asian refining margins rise

London (Quantum Commodity Intelligence) – Middle East crude prices hit seven-week highs Wednesday, as Asia continued to follow the renewed optimism from Europe and the US, rather than focus on the demand slowdown from India.

Dubai cash for July delivery was assessed at $67.71/b on May 5 (16.30 Singapore time), up $1.92/b from Tuesday's Singapore close, while the July/Aug spread was $0.05 wider at +$0.55/b.

DME Oman futures for July settled $67.80/b at the Asian close, up $1.90/b on the day.

Saudi Aramco cut OSP differentials for June on crude sales to Asia, including its flagship Arab Light gradw down by $0.10/b to Dubai/Oman +1.70/b. The small cut was largely factored into the market, although some had called for deeper cuts for Asia.

Cash Brent (BFOE) for July was assessed at $69.80/b, up $1.63/b versus Tuesday's Singapore close.

Products

Naphtha cracks rallied for the eighth day with the east-west spread remaining below $10/b and choking off supply.

Spot naphtha on a CFR Japan basis rose to $618.50/mt, up $13/mt on the day and trailing behind a $14/mt hike on nearby swaps as two spot deals were heard at $616-617/mt for H2 July loading.

The rally is being driven by soaring gasoline margins in Europe that has forced up prices there.

Gasoline cracks eased slightly, but remain elevated as a result, with five transactions heard - three for 92 RON at prices equating to $76.40-76.76/b FOB Singapore for nearby delivery and two for 95 RON at $78.60-78.70/b.

RON 92 was assessed at $76.53/b with 95 RON at $78.65/b.

A similar dynamic was seen in middle distillates and particularly jet kero, where the east-west spread narrowed sharply to -$8.80/b versus $10.50/b on Tuesday.

Rising demand in Europe hauled up Asian swaps with the June swaps rising almost $2/b to $73.11/b FOB Singapore.

The June swap versus cash August Brent rose 32 c/b to $3.72/b in a day. No deals were heard.

10ppm diesel traded twice at a 15-20 c/b discount to the underlying swaps, leaving spot marked at $74.42/b FOB Singapore, up $1.95/b on the day with the June crack at $5.25/b, the highest in weeks.

Marine fuel oil cracks were broadly steady and higher-sulfur material fell back amid reports of a stock build in Fujairah. Flat prices for 180 cst were $399.25/mt, 380 cst at $393.50/mt and marine fuel at $507/mt, all FOB Singarpore.