Europe oil/products: Brent slumps, HSFO cracks rebound
London (Quantum Commodity Intelligence) - Brent slumped Wednesday amid a broad market sell-off as fears of rising inflation gripped the market, and the oil market weighed up the prospect of fresh Iranian exports.
US and Iranian negotiators are aiming for a final round of talks in Vienna next week on the terms for Washington's re-entry to the nuclear deal, the Iranian chief negotiator has said, implying a deal is possible before the Iranian presidential election in June.
Analysts say that Iranian crude exports have risen to between 650,000-750,000 b/d in recent months, mostly going to Chinese teapots.
Iran's vice-president Eshaq Jahangiri in early May forecast that Iran could bolster its crude and condensate exports to 2.5 million b/d million once US restrictions are lifted, although this is debatable.
But Iran will be able to bypass the Strait of Hormuz.
The National Iranian Oil Company has started pumping through the Goureh-Jask Crude Oil Pipeline, which can carry 1 million b/d, to the Jask terminal on the Sea of Oman.
Products
Naphtha cargo prices dropped $27.75/mt ($3.06/b), failing to keep up with the crude slide, and improving its crack value. Further along the curve, quarter three and four cracks were little changed from Wednesday and were around 30 cts/b higher than Tuesday. Propane cargo prices only fell $7/mt today, but the spread below naphtha has ballooned since mid-April.
Premium unleaded gasoline barges fell $30.25/mt ($3.63/b), while all-day Eurobob E5 and E10 barges saw relatively small losses in comparison to reflect trades when crude was higher. July Eurobob cracks are the high point for the summer season, and were unchanged today at $10.29/b, and have moved little all week. The July crack was trading around $10.78/b at the start of April, but US demand has disappointed.
Both jet barges and cargoes were offered at $20/mt above June Low Sulfur Gasoil futures, depressing cargo prices more than barges. Jet cargo racks fell heavily The refining margin improves in the nearby curve, but the spread between jet barge crack and diesel barge cracks in August has been widening over the last week during the summer holiday season, even with more relaxation of travel restrictions.
Low Sulfur Gasoil futures fell $3.08/b, about the same as Brent, and a dent in the relentless surge in distillate cracks this month. Diesel barges traded at $2/mt below June Low Sulfur Gasoil futures.
High sulfur fuel oil barges fell $15.50/mt ($2.44), and its crack value bounced back. There was a stronger gain in the June HSFO barge crack to suggest the market has turned a small corner after a collapse since mid-April.
