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Middle East crude rangebound in Asia trade as buyers recede from May cycle

Crude spreads for benchmark Dubai futures were largely rangebound in mid-morning trade in Asia Tuesday, after touching fresh lows the day before, as buyers receded further from the spot market at the tail end of the May trading cycle.

“Market wise, we are just waiting for the month to pass. It is bad for everyone; producers, traders, buyers and sellers,” a crude trader based in Singapore said.

Buying appetite from refiners in Asia was receding further as the end of the May cycle approached, traders said. It was unlikely buyers would come out to pick up spot cargoes at this point in the cycle, they said.

Several regular spot market buyers have deferred or canceled their monthly purchases on narrowing product margins as the demand outlook worsens by the day amid escalating containment efforts to curb the coronavirus pandemic, traders said.

Refiners such as Taiwan’s CPC have not issued buy tenders for May loading cargoes of Middle Eastern sour crude.

On the other side, tenders offering cargoes for sale in the spot market, such as those for Russia’s ESPO Blend crude, have failed to get much traction from buyers despite relatively attractive freight charges compared with higher shipping costs from the Persian Gulf and other routes into Asia.

The last spot market trade heard for ESPO, a popular grade in North Asia, was from seller Rosneft’s crude tender that was awarded in the week of March 16. The cargoes in the tender were purchased at premiums of around 80 cents/b to Platts front-month Dubai crude assessments, according to market reports.

Buying activity for the week of March 23-27 was expected to remain muted, market participants said Tuesday.

Despite an uptick in global crude oil prices overnight, intermonth spreads for Dubai crude futures remained rangebound after sinking to new lows at the close of Monday trading in Singapore at 4:30 pm (0830 GMT), surpassing minus $2/b contango levels.

The prompt April/May Dubai crude futures spread was pegged at minus $2.01/b at 11 am in Singapore (0300 GMT) Tuesday, up slightly from the minus $2.08/b assessed at Monday’s 0830 GMT close.

The May/June Dubai spread was pegged at minus $2.01/b at 11 am Tuesday, littlechanged from the minus $2.04/b assessed on Monday.

The May Brent/Dubai Exchange Futures for Swaps spread also remained near Monday’s assessment of minus $4.12/b to be peggged at minus $4.10/b at 11 am Tuesday.
Source: Platts

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