Dubai continues to gain on Brent, Asia refining margins hit by weaker products

London (Quantum Commodity Intelligence) – Crude oil prices retreated in Asia Friday, catching up with western benchmarks after the Singapore holiday Thursday, but Middle East benchmarks continued to gain on Brent.

Dubai cash for July delivery was assessed at $65.30b on May 12 (1230 Singapore time), down $1.22/b from Wednesday's Singapore close, while DME Oman futures for July settled at $65.39/b at the Asia close, down $0.59/b from Thursday.

Cash Brent (BFOE) for July was assessed at $68.60/b, down $1.45/b, to narrow the Brent/Dubai cash spread to $1.85/b – the lowest since April 8.

Demand for July spot barrels was seen firm with bids reported for July cargoes of Upper Zakum and Al Shaheen at Dubai swaps +$1/b.

Products

Naphtha CIF Japan physical retreated Friday, with the spot crack sliding to $90.45/mt - down almost $7/mt on the day and $9/mt on the week. The cash assessment of $584/mt was the lowest outright price since late April.

Gasoline cracks were down again Wednesday as India's ongoing COVID-19 crisis and the resumption of the US Colonial pipeline dampened market confidence. The June crack versus August Brent was $4.83/b, down $1.39/b on the day and the lowest crack for the month ahead in two months. In the physical market, three trades for 92 RON were heard at $71.60, while 95 RON was traded at $73.50/b.

Jet kero cracks rowed back from Wednesday's 14-month highs of $4.21/b, with the June spread versus Brent easing to $3.75/b. This week's 3.6% increase in Singapore distillate inventories dampened sentiment. Earlier, Quantum reported sales of jet fuel in Australia had reached their highest level in March since Covid restrictions were introduced, bolstered by a recovery in domestic travel that saw demand for fuel on internal flights at 86.8% of the March 2019 level.

Diesel proved more resilient than jet kero, with benchmark 10ppm bid and traded higher. FOB Singapore traded twice at June swaps +$0.20/b and once at underlying swaps strip +0.20/b. But cracks retreated slightly with June swaps versus Brent slightly lower at $7.11/b. Refineries returning from second-quarter maintenance are likely to keep a lid on distillate margins.

Fuel oil markets remained under pressure as cracks tumbled to fresh lows. HSFO 380cst for June retreated to -$8.20/b versus Brent, a drop of $0.80/b on the month. Differentials also stayed in negative territory with 380 CST cargoes trading at underlying swaps less $1/mt. Marine Fuel (0.5% sulfur) also dropped $17/mt from Wednesday to a three-week low of $479.50/mt.