Crude contango rangebound for Dubai futures as market awaits fresh cues
Dubai crude futures were in a stable contango in Asia mid-morning trade July 27, with the market awaiting fresh drivers as the September-loading trading cycle nears its end.
At 11am Singapore time (0300 GMT), the August/September Dubai futures intermonth spread was pegged at a contango of 25 cents/b, stable from the Asia close on July 24, S&P Global Platts data showed.
The September/October spread was pegged at a contango of 21 cents/b, widening 2 cents/b from the previous close.
The prompt Dubai futures market structure was in backwardation for the first half of July, before dipping into a contango last week, Platts data showed.
Suppressed refinery margins and high supply inventories are expected to keep the demand outlook bearish, according to sources.
“Any further hikes in the new OSPs would dampen buying further,” a Singapore-based crude oil trader said recently, adding that spot market differentials have trended lower following the hikes in OSPs issued earlier this month.
Reflecting bearish fundamentals, the cash/futures spread has fallen further in recent days. The Dubai M1/M3 spread was assessed at 23 cents/b on July 24, marking a seven-week low, Platts data showed.
The September trading cycle for Middle East crude cargoes has largely wrapped up, with market participants evaluating their expectations for the upcoming round of official selling prices.
Meanwhile, the September Brent/Dubai Exchange of Futures for Swaps was pegged at 19 cents/b, narrowing 30 cents/b from the Asia close on July 24.
The September Dubai swap was pegged at $42.99/b at 0300 GMT on July 27, inching 12 cents/b higher from the previous close, the data showed.