A positive fuel oil crack and stability in middle distillates yet relative weakness in light ends was lending support to middle and heavy sour Middle Eastern crude grades as refiners looked to minimize production of light ends, trade sources said Monday.
The front-month Dubai crack swap for 180 CST fuel oil in Singapore hit plus $1.282/barrel on Friday, the highest level since the end of January. Fuel oil averaged a crack swap to Dubai of minus $1.48/b in May.
In contrast naphtha, despite rising slightly remains deeply negative at minus $13.19/b on a crack swap to Dubai basis Singapore. The crack swap to Dubai for naphtha in May averaged minus $9.66/b.
In turn, differentials for medium and heavy Middle Eastern sour crudes have found support as refiners look to these grades, sources said.
"The heavy and medium sours are quite strong ... refiners want the heavy crude to keep crackers full without making light ends," a trader said.
Denmark's Maersk was heard to have sold its allocation of August loading Qatari Al-Shaheen around the Dubai swap plus $1.15-1.30/b.
In addition Bahrain's Banoco crude grade was heard trading at a $0.30-0.50/b premium to Saudi Arabia's Arab Medium official selling price for July.
The grade was assessed at a $0.40/b premium to the OSP on Friday/. In contrast the average assessment for the grade in May was at a 5 cents/b premium to the OSP.
