Middle East crude prices ease, Marine fuel cracks soar on Suez fears
Dubai, UAE (Quantum Commodity Intelligence) - Benchmark Middle East crude oil eased slightly Friday alongside international benchmarks, but fears over persistent delays to shipping in the Suez Canals meant Marine Fuel cracks rallied as vessels snapped up material in Singapore.
Traders were monitoring the lack of progress on freeing the stricken container tanker that has been blocking the Suez Canal since Tuesday.
"Oil prices are having another change of heart, possibly driven by no end in sight of the Suez Canal," said Stephen Innes, chief global markets strategist at Axi, in a note March 26.
Vessel tacking company Kpler Friday said 11 oil tankers holding 9.8 million barrels of crude oil were waiting to transit the Suez Canal.
Kpler noted that one crude carrier, Marlin Santorini, has diverted away and is expected to sail via the Cape of Good Hope.
Oil markets had largely shrugged off the Suez situation over the previous 48 hours, have rallied strongly on the initial news, but concerns of rising COVID-19 infections and potential for further lockdowns continued to weigh on sentiment.
Dubai cash for May delivery was assessed at $62.05 per barrel on March 25 (16.30 Singapore time), down $0.35/b from Thursday's Singapore close, while DME Oman futures for May were $0.03/b higher at $62.24/b.
Front month cash Brent for April loading was slightly down at $63.40/b, $0.11/b down on the day.
Diesel physical prices weakened alongside the fall in the swaps market to leave front month cracks lower at $3.17/b for the 10ppm grade. April swaps were marked $0.57/b lower at $66.5/b. Cash discounts were pegged at -$0.30 to the swap curve.
Products
In terms of products, all fuel cracks firmed, but the Marine Fuel 0.5% grade rallied more strongly, with April Singapore swaps firming to a $104/mt premium over 380cst, up $4/mt on the day as shippers scrambled for molecules.
With Brent easing, that meant the front month crack rose $0.80/b to $10.86/b. 180cst and 380cst were roughly a dollar firmer on the day and cracks were up a nudge. No physical deals were heard and grades were assessed in line with the move in swaps.
Further up the barrel, Jet Kero cracks continued to weaken alongside the physical as news from Europe provided little optimism for a return to travel.
April Singapore Jet Kero swaps outstripped the fall in crude to $64.20/b and in the physical market, 100,000 barrels changed hands at a $0.60/b discount to the underlying swaps.
The crack was marked at a one-week low of $0.72/b.
Diesel physical prices weakened alongside the fall in the swaps market to leave front month cracks lower at $3.17/b for the 10ppm grade. April swaps were marked $0.57/b lower at $66.5/b. Cash discounts were pegged at -$0.30 to the swap curve. Gasoil 500ppm tracked diesel.
Naphtha cracks held up versus other products, with April swaps valued $7/mt higher at $571/mt and May $4.50/mt higher at $562.5/mt, steepening the backwardation. Physical was valued at $573.50/mt for 45-days out.
Two physical deals were heard for gasoline - both for 95 RON - one at flat to the underlying swaps and another at $71.30/b. The cracks were marginally weaker for 92 RON at $5.77/b versus $6.06/b and the cash was valued at a $0.10/b discount to underlying swaps.