Dubai crude retreats, EFS narrows, gasoline curve nears contango
London (Quantum Commodity Intelligence) – Middle East crude oil prices softened Tuesday as India's spiraling COVID-19 cases continues to hit demand from Asia's second largest oil consumer.
Dubai cash for July delivery was assessed at $65.50/b on May 11 (16.30 Singapore time), down $1.20/b from Monday's Singapore close, while DME Oman futures for July settled $65.63/b at the Asia close, down $1.22/b on the day.
The July Brent/Dubai EFS dropped below $3/b for the first time since April 9, reflecting the weaker Brent structure as the North Sea maintenance season passes. Quantum assessed the July EFS at $3.14-$2.91/b, down $0.15/b on the day.
Cash Brent (BFOE) for July was assessed at $67.59/b, down $1.24/b versus Monday's Singapore close.
Products
Gasoline cracks fell on Tuesday on growing concerns of fuel demand in the Phillipines, Vietnam and Malaysia, who either reported rising coronavirus infections or lower-than-expected economic growth figures.
The infection figures remain small compared to European standards, but the refined oil product markets were cautious after Malaysia announced a new lockdown, Vietnam's government announced the outbreak threatened economic stability and the Philippines reported lower than expected economic growth.
Gasoline cracks in Singapore fell $0.48/b on the day for spot versus July cash Brent and $0.39/b for June versus August cash Brent to stand at $6.25/b and $6.39/b, respectively.
The weakness was also reflected in the curve, with the June-July time spread for cracks now threatening to flip into contango, with those swaps marked flat at $6.39/b versus a slight backwardation on Monday.
Two RON 95 deals were heard, showing the 95-92 spread was narrowing sharply following the news that major 95 RON buyer Malaysia was headed into lockdown.
Naphtha cracks slipped back as well on Tuesday, amid reports that LPG was being favoured by crackers, with the spot crack hitting a near two-week low of $94.21/mt and June an eight-day low of $93.45/mt.
Jet kero cracks crept higher, extending a near three-month high on rising global demand for air travel. June cracks were marked at $3.94/b and spot was marked at $3.86/b on cash differentials of $0.10/b.
The June-July contango has been narrowing for more than a week from $0.59 a week ago to just $0.42/b on Tuesday, reflecting optimism about demand.
In the diesel market, 10ppm swaps were broadly flat and cash differentials were unchanged at around $0.10/b. Like jet, the nearby curve is becoming flatter, reflecting stronger demand amid what is expected to be lower exports of diesel from India.
Fuel oil cracks slipped amid weaker crude and fears that new restrictions around shipping and vessels arriving from India would be subject to new quarantine measures. Cash differentials were marked at flat for 180 cst, -$1/mt for 380 cst and -$0.50 for marine fuel.