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Oct Brent/Dubai spread pushes past $3/b on softer outlook

Benchmark Dubai crude futures’ discount to ICE Brent trading for October pushed past the key $3/b threshold Wednesday morning in Asia, with a softer trading month expected over August for October-loading sour crude barrels.

At 11 am in Singapore (0300 GMT), the October Brent/Dubai Exchange of Futures for Swaps spread was notionally assessed at $3.16/b, rising from $2.93/b assessed at the close of trading in Asia on Monday.
The September Brent/Dubai EFS also showed weakness on the Dubai leg Wednesday morning, pegged at $2.35/b compared to $2.27/b Tuesday evening.

Crude oil traders said they expect a significant portion of scheduled turnarounds for Asian refiners to kick in starting October, which would push down demand for Middle East sour crude barrels.

Crude scheduled to load in October from Middle East ports will typically trade over the month of August.

On the other hand, some traders said they were receiving October inquiries for sour crude grades before July has ended, implying some urgency on the buy side.

Demand from China, specifically Shandong, could be down next month as the province undergoes manufacturing caps to limit pollution, market participants based there said.

The premium held by Oman crude — a staple for Chinese independent refiners — dropped significantly in the last few days of July after averaging 44 cents over Dubai for the month, Platts data showed.

Platts September cash Oman was assessed at parity to Dubai on Tuesday, in line with strong selling interest seen for the medium sour grade during the Platts Market on Close assessment process.

Oman’s premium to Dubai futures dropped 39 cents/b on the day to $1.58/b Tuesday evening, the same premium as between September Dubai cash and futures.
Source: Platts

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