CRUDE MOC: Dubai, Oman sink lower amid tepid buying interest for Middle East crude
The Middle East sour crude structure led by benchmark Dubai and Oman cash assessments sunk lower Wednesday at the end of the Platts Market on Close assessment process for crude oil in Asia.
Several cargo bids emerged on the MOC Wednesday, but failed to push discounted spot prices significantly upward. Spot market activity also showed several ongoing tenders but there was no rush from buyers to pay top dollar for Middle East crude cargoes.
This was despite several market indicators that could have proved supportive of crude prices in Asia after nearly a month of bleak demand. The US slapped sanctions on Rosneft for its alleged purchase of Venezuelan crude overnight, while China handed tariff exemptions to its refiners importing oil from the US.
Activity among Chinese refiners picked up, providing brief support for China-specific crudes such as Oman this week. But Oman’s premium to April Dubai futures fell back to last week’s levels Wednesday, being assessed at 18 cents/b at the 0830 GMT market close in Asia.
Cash Dubai — currently caught in a flux between contango and backwardation — fell further into negatives versus April Dubai crude futures Wednesday. It was assessed at minus 31 cents/b at the close, wider than minus 6 cents/b on Tuesday.
Cargo activity continued on the Platts MOC Wednesday, with three bids seen for Upper Zakum and Das Blend crude. One cargo of Upper Zakum was offered, and eventually traded before the 4:30 pm (0830 GMT) close. A trade also occurred for Das Blend crude during Wednesday’s MOC, totaling 1 million barrels traded between the two 500,000 barrel clips.
Japan-based trading house Mitsui bid for an April loading of Upper Zakum cargo, standing at a discount of 20 cents/b under Platts front-month Dubai crude assessments at the end of the MOC.
A second Upper Zakum bid was placed by Glencore, which stood at a discount of 98 cents/b under the OSP at the close. Upper Zakum is typically traded against its own OSP as well as against Dubai in the spot market.
No selling interest was seen for either of the Upper Zakum bids.
However, Exxon’s offer for Upper Zakum was purchased by Shell toward the end of the MOC, when Exxon moved to a discount of 95 cents/b under the OSP.
For lighter grades, Gunvor bid for a Das Blend cargo loading over April 1-30 in the MOC, and was sold to by French trader Total when the bid reached a discount of 90 cents/b under the Das OSP toward the end of the MOC. Gunvor returned with a second Das bid at minus 90 cents/b, but did not receive any further selling interest and remained standing until the 0830 GMT close.
Additionally, four partials of Dubai crude changed hands Wednesday, bringing this month’s total to 76.