Sour crude complex steady after Dubai structure hits $3/b milestone

Singapore —
Benchmark Dubai crude futures spreads and the Brent/Dubai Exchange Futures for Swaps spread remained largely steady Friday morning in Asia, after the Dubai cash premium to futures hit a six-year high of $3.08/b at Thursday’s close.

Futures spreads held their ground Friday morning, with the December/January Dubai futures intermonth spread being pegged at $1.24/b at 11 am in Singapore (0300 GMT). It had been assessed at $1.22/b.

The January/February Dubai futures spread was pegged at 84 cents/b at 11 am, largely steady from Thursday’s assessment of 85 cents/b.

Market participants told S&P Global Platts that restricted arbitrage supplies into Asia were bolstering demand for Middle East sour crudes, especially those with medium gravity.

“Arbitrage tightness is the main reason for high price differentials for the Middle East sour crude market this month,” said a crude trader based in Singapore.

January Dubai cash/futures, also known as the M1/M3 structure, pushed past a $3/b backwardation at the end of the Platts Market on Close assessment process on Thursday, underpinning strength for Middle East sour crudes amid supply tightness in Asia for January volumes.

The Dubai structure was assessed at $3.08/b at 4:30 pm in Singapore (0830 GMT), up from $2.91/b on Wednesday. It was last more steeply backwardated six years ago, reaching at $3.09/b on September 18, 2013, according to Platts data.

Friday is expected to see more of the same price action in the spot market for sour crude grades. Price differentials for Middle East crudes are expected to remain firmly supported on the current fundamentals, traders said.

The January Brent/Dubai EFS held largely in place Friday morning, being pegged at $3.36/b at 11 am in Singapore (0300 GMT). It was assessed at $3.38/b on Thursday at the close.

— Eesha Muneeb, [email protected]

— Edited by Nurul Darni, [email protected]