Middle East crude prices ease, product cracks rise
London (Quantum Commodity Intelligence) – Middle East crude oil prices eased from pre-weekend levels Monday, as sentiment swung back towards the downside and concerns over the fall off in demand from India.
Analysts expect demand for oil/liquids to fall 700,000-900,000 barres per day during May from Asia's second largest consumer.
Dubai cash for the new front-month July delivery was assessed at $64.35/b on May 3 (16.30 Singapore time), down $0.85/b from Friday's Singapore close, while July/Aug spread was pegged at +$0.50/b.
DME Oman futures for July settled $64.48/b at the Asian close, down $0.78/b from Friday.
ADNOC Sunday announced its Official Selling Prices for June, set against the recently-launched ICE Futures Abu Dhabi (IFAD) Murban contract.
The Murban monthly average was $63.35/barrel, while Upper Zakum was set at a discount of $0.40/b versus Murban, Umm Lulu at a discount of $0.05/b and Das Island at minus $0.35/b.
Cash Brent (BFOE) for July was assessed at $66.85/b, down $0.95/b versus Friday's Singapore close.
Products
Refining margins were much firmer in Asia as crude fell back.
With most of Europe closed for a bank holiday, both distillate and light end cracks for spot and month ahead continued to climb as fuel oil margins also rose in a rare move that saw all refined products climb.
Just a handful of physical deals were heard, with one each for diesel, naphtha and gasoline, indicating that products were lagging the falls seen in crude.
Specifically, naphtha cracks in Asia rose for the seventh successive day as the supply-demand balance in Europe looked tighter and crackers in Asia returned.
The front month crack rose to $96/mt from $93.25/mt a day earlier on news that Shell sold a cargo to Trafigura at $589/mt for 2H July delivery CFR Japan.
That underpinned a rise in gasoline margins, with RON 95 heard trading at flat to the underlying swaps curve, which had been at a discount previously.
Diesel cash differentials were stable at -$0.20/b. But with swaps market lagging the fall in crude, cracks firmed, with the 10ppm diesel spot crack versus July Brent rising above $4/b for the first time in three weeks.
No physical deals were heard in the jet kero market and swaps lagged the crude fall to push the crack up. Talk that jet kero demand is on the rise has yet to be seen in the cash markets and jet remained pegged at a small discount to the swaps.
No fuel deals were heard, but the high sulfur cracks tracked swaps. Cash differentials remained positive.