Middle East crude prices rally ahead of Saudi OSPs
London (Quantum Commodity Intelligence) – Another turn in sentiment saw Middle East crude prices move back into positive territory Tuesday, buoyed by positive sentiment over the pace of global demand growth, while concerns over India took a backseat.
Dubai cash for July delivery was assessed at $65.79/b on May 4 (16.30 Singapore time), up $1.44/b from Friday's Singapore close, while July/Aug spread was unchanged at +$0.50/b. DME Oman futures for July settled $65.90/b at the Asian close, up $0.78/b from Monday.
Focus in the Middle East switched towards this week's Saudi OSPs for June, which typically start the trading cycle for the new month. Weaker demand due to lockdowns in Japan and India have raised expectations for a reduction in OSPs, said sources.
Cash Brent (BFOE) for July was assessed at $68.17/b, up $1.32/b versus Monday's Singapore close.
Products
In the product markets, both light ends and distillates cracks rose, leading crude higher.
Physical spot deals were seen for jet kero for the first time in more than a month with cash differentials at a premium to the underlying swaps curve, indicating a much tighter market.
One physical cargo was heard at a 10-ct premium to swaps, which compares to the last trade heard at a 50-ct discount, as airline and passenger control data in Europe and the US show air travel by some metrics at a one-year high.
Spot flat prices were assessed at $71.23/b with the crack versus Brent cash July at $3.04/b, the highest in months.
10ppm diesel was also firmer, albeit the rise was less sharp.
Cash differentials were steady at – 20 cts, but marginally firmer swaps pushed the spot crack close to $4.30/b.
In the light ends, both naphtha and gasoline cracks hit a one month high amid an expectation of slowed supply of naphtha from Europe to Asia.
The east-west spread narrowed from $10.5/mt on Monday to just $9/mt on Tuesday, prompting spot purchases.
One deal was heard at $612/mt CFR Japan for delivery in the second half of June and a steep $8.50/mt backwardation in the physical market between 2H June and 2H July.
Quantum assessed spot naphtha delivery up $18/mt on the day at $605.75/mt with the spot crack versus July cash Brent above $100/mt for the first time in almost a month.
That triggered a flurry of gasoline trades, with six deals heard for RON 92 and RON 95. Gasoline cracks on a spot basis also rose to the highest since 7 April at $7.98/b for the former and $9.15/b for the latter.
The rise in cracks come despite the continuing outbreak of covid in India that has stunted gasoline demand growth, with gasoline sales in April down 13% on a month earlier and 4% on April 2019 levels.
Elsewhere, fuel oil cracks eased around 25 c/b.