Asian diesel premium collapses as naphtha soars against the trend; fuel oil price spread points to deep-rooted Middle East supply disruption concerns
- On Monday, the Asian diesel market clearly softened, with the 10ppm sulfur diesel spot differential sliding below $30 per barrel, swap backwardation narrowing simultaneously, diesel crack spread hovering around $60 per barrel, and zero diesel trades in the Singapore spot window.
- The jet fuel spot window remained active, with the jet fuel premium over diesel steady at around $14 per barrel, indicating that the recovery of aviation demand is still independently supporting middle distillate valuations.
- Naphtha prices jumped $28 along with crude benchmarks to $1,172 per ton, with early June cargo premiums staying firm and supply concerns continuing to intensify; although the naphtha-Brent crack spread narrowed by $8, it remained elevated at $405.28 per ton.
- Five gasoline trades were concluded intensively in the Singapore window, with supply outlook tightness continuing to bolster the price midpoint; overall, light distillates are showing a relatively firm pattern of resonance between rising crude costs and tight supply-demand balance.
- The Hi-5 fuel oil spread plummeted to about $74 per ton, the lowest in about a month. High sulfur fuel oil saw its crack spread rise to a $2.30 per barrel premium, supported by the supply cut of Middle Eastern heavy sour crude. Meanwhile, the crack spread for very low sulfur fuel oil fell below $14 due to ample prompt supply.
- The fuel oil market is experiencing a structural split — the Strait of Hormuz blockade has cut off Iranian high sulfur crude and fuel oil exports, directly boosting the premium for high sulfur cargoes, while the supply logic for low sulfur cargoes has not yet suffered an equivalent impact. This divergent crack may persist until the Middle East situation becomes clearer.
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