Dubai futures: November EFS widens; market eyes impact of gas prices
The front-month Brent/Dubai Exchange of Futures for Swaps continued to surge in mid-morning trade in Asia Sept. 27 while market participants eye the impact of rising gas prices on Asian crude demand for the upcoming winter season.
The November Brent/Dubai EFS was pegged at $4.22/b at 11 am Singapore time (0300 GMT), up 20 cents/b from the Asian close Sept. 24, S&P Global Platts data showed.
The EFS was at a near three-month high since July 8 when it was pegged at a premium of $4.29/b, Platts data showed.
Oil prices have continued to climb amid expectations of increased crude demand prompted by soaring gas prices ahead of the winter season, sources said.
“One of the biggest drivers,” a trader in Singapore said referring to the recent rally in oil prices driven by increasing gas prices.
The winter weather forecast for Japan, released Sept. 24 by the Japan Meteorological Agency, showed that most regions are forecast to experience either a 30-year-average, or below average, temperatures over December-February, in a sign that the country’s winter gas, power and oil demand are likely to be supported during peak demand months.
However, ample stocks of LNG and kerosene could limit crude imports into the country, traders said.
Spot buying activity in September from major economies in Asia such as Japan, India and China has been minimal while keeping a lid on cash premiums as several Middle East grades saw tepid buying interest, the trader in Singapore said.
Early Sept. 27, a trader in Singapore reported that October-loading Basrah Heavy was sold to private Indian refiners at discounts of around 50-70 cents/b to the grade’s OSP, but this information could not be immediately confirmed.
Intermonth spreads though saw little change compared to close on Sept. 24.
The October/November timespread was pegged at a backwardation of $1.03/b, up 2 cents/b from the Asian close on Sept. 24, Platts data showed.
The November/December timespread was pegged at 88 cents/b, also up 2 cents/b over the same period.