DUBAI FUTURES: Sour crude premiums steady as market mulls recent rally

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Singapore —
Middle East sour crude spreads took a breather Friday morning in Asia as market participants took stock of Thursday’s rally in Dubai and Oman premiums, amid emerging spot requirements for September trading.

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At 11:00 am in Singapore (0300 GMT) Friday, September cash Dubai crude’s premium to futures was largely steady at $1.36/b,compared with the assessed $1.35/b at the close of trading in Asia on Thursday.

Sour crude markets were sharply higher by the close of trading in Singapore on Thursday, which crude traders attributed in large part to a sudden emergence of light and medium sour crude demand from Chinese independent refiners, particularly those based in Shandong.

Several million barrels of September-loading or October-arrival Oman crude, along with a few cargoes of light sour Middle East grades were concluded by sellers overnight, traders told S&P Global Platts Friday morning.

September cash Oman’s premium to September Dubai futures jumped 45 cents/b in a day to $2.10/b Thursday evening, after having steadied for the most part of the week around $1.65/b levels.

The uptick in medium sour spreads also narrowed the Brent/Dubai EFS Friday morning. The spread between September Brent and Dubai futures tightened to $2.71/b at 11 am (0300 GMT) in Singapore, compared with $2.83/b Thursday night.

Crude market participants expect the uptick to spill over into other grades in the complex as well, which could see recent cargoes of Qatari Al-Shaheen and Iraqi Basrah crudes offered via tenders awarded at higher premiums than last month, they said.

The Platts Market on Close assessment process on Thursday saw ADNOC’s Murban being bid up and traded at a discount of 28 cents/b to its OSP after having spent the earlier part of the week at minus 40 cents/b.

A 500,000-barrel cargo of September-loading Murban traded as recently as Wednesday at a discount of 45 cents/b to its OSP on Japan’s RIM trading board, according to sources.

Besides Murban, two bids of medium sour Upper Zakum crude were also seen in the MOC on Thursday. Shell bid for a September-loading cargo, which stood at a discount of 24 cents/b against its OSP at the close.

Total also bid for a similar Upper Zakum cargo, but as a premium against front-month cash Dubai. Total’s bid stood at a premium of $1.20/b as of 4:30 pm (0830 GMT) in Singapore Thursday.

–Eesha Muneeb, eesha.muneeb@spglobal.com

–Edited by Nurul Darni, nurul.indriani.darni@spglobal.com