Middle East crude prices edge higher, gasoline cracks soften

Dubai, (Quantum Commodity Intelligence) - Benchmark Middle East crude oil edged higher Monday, shrugging off demand concerns and sluggish buying from Asian refiners.

Dubai cash for May delivery was assessed at $63.15 per barrel, up $0.80/b from pre-weekend Singapore close, while DME Oman futures for May were 83 cents higher at $63.28/b.  

Following the previous week's sharp downturn when Middle East crude retreated around 8% from 13-month highs of above $68/b, major investment banks have signaled more optimistic outlooks going forward.

Goldman Sachs said it sees last week's pullback as a strong buying opportunity, while Morgan Stanley on Monday noted that the market remains undersupplied.

Martijn Rats, global oil strategic at Morgan Stanley, told Bloomberg TV Monday that the global market is undersupplied by 2-2.5 m/d per day, a figure that was at the "historical upper end" of market undersupply.  

May-loading Brent futures were trading around $0.60/b up from Friday's Asian close at $64.23/b, while the Brent/Dubai cash spread narrowed by around 20 cents to $1.19/b.

Products

Naphtha edged higher, but the petrochemical feedstock remained subdued with April swaps at a slight discount to Brent. On a flat price basis that amounted to $568/mt.

Benchmark 92 RON gasoline lost ground against Brent with the Apr21 crack easing by around $0.50 to $5.75/b on the day. Two 95 RON physical deals were heard for prompt loading at $71.80-72/b.

April Singapore gasoil swaps moved higher in line with crude, maintaining the spread versus Brent at around $6/b.

Jet swaps firmed versus the crude complex, with April swaps up 94 c/b at $65.80/b and pushing the crack to $1.46/b, up from $1.11/b a day earlier.

And the higher sulfur fuel oil complex was flat to slightly firmer versus Brent, with the April 180 cst crack at -$4.93/b versus -$4.97/b a day earlier, with the 380 cst at -$5.76/b, 20 c/bl firmer on the day.

The benchmark marine fuel 0.5% sulfur crack firmed to $11.22/b, up 37 cents on a day earlier.

On a flat price basis the 180 cst April swap was marked at $377.25/mt, 380 cst at $372/mt and the Marine Fuel at $476/mt. One physical deal was heard at a $1/mt premium to underlying swaps.