CRUDE MOC: Cash Dubai spread to Dubai futures drops to one-week low

The benchmark cash Dubai spread against same-month Dubai futures fell to a one-week low amid weaker buying sentiment at the close of the Platts Market on Close assessment process in Asia on June 23.

The Dubai crude cash/futures (M1/M3) spread — a key indicator of spot market sentiment for sour crude in Asia — was assessed at a premium of 82 cents/b at the 4:30 pm (0830 GMT) Singapore close on June 23, down 19 cents/b from $1.01/b assessed the previous day.
The spread has narrowed for the fourth consecutive day after peaking at a four-month high of $1.31/b on June 18, Platts data showed.

Similarly, Platts cash Oman was assessed at 82 cents/b against Dubai futures on June 23, down 19 cents/b from June 22.

The lower spreads between cash Dubai/Oman against Dubai futures reflect mellowing sentiment in the Middle East sour crude market as most buyers have fulfilled their requirements for the month while spot barrels remain ample.

“[There’s] not too much demand [left], [most] buyers have covered [their requirements] already,” said a North Asian crude trader, adding that plenty of cargoes remained available in the spot market.

During the Platts MOC assessment process on June 23, Singapore-based EXTAP (ExxonMobil Trading Asia Pacific) was seen offering two 500,000-barrel cargoes of Abu Dhabi’s Upper Zakum crude, for loading over August 1-25 from Zirku Island, on bill of lading price terms.

The oil major commenced the offers for the cargoes, separately, at a premium of 25 cents/b over the grade’s official selling price in August and a premium of $1.90/b over Platts front-month cash Dubai assessments in August.

The offers were gradually eased and at the close of the MOC process stood at a discount of 10 cents/b to the OSP and a premium of $1.55/b over Dubai, respectively.

Platts assessed the OSP differential for Upper Zakum at minus 15 cents/b on July 23, down from 25 cents/b premium assessed on June 22.

On the Middle East sour crude partials MOC, a total of 11 partials of 25,000 barrels traded on June 23, consisting of 10 August Dubai partials and a single August Oman partial.

Buyer Vitol and seller Petrochina were seen trading nine August Dubai partials with each other during the MOC process on June 23, bringing their total trade with each other at 19 partials for the month so far.

A convergence occurs when 20 partials are traded between two counterparties, resulting in a full 500,000-barrel physical cargo being declared from the seller to the buyer.

For Dubai partials, the seller has the option to deliver a Dubai, Oman, Upper Zakum, Al-Shaheen or, with a quality premium, Murban cargo to the buyer.

The partials trades on June 23 brought the number of partials traded in June so far to 72, consisting of 65 Dubai and seven Oman partials. No convergences have been declared yet.
Source: Platts