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Brent/Dubai spreads back above $2/b amid discounted market

Increase font size  Decrease font size Date:2020-01-19   Views:48
Benchmark Dubai crude futures' discount to ICE Brent widened in mid-morning trading hours in Asia on Friday, as trading for the March loading cycle in the Middle East sour crude market showed firmly discounted price levels for most spot cargoes.

At 11 am in Singapore (0300 GMT), the March Brent/Dubai Exchange Futures for Swaps spread was pegged at $2.09/b, up from $1.98/b assessed at the close of trading in Asia at 0830 GMT Thursday.
Spot market activity kicked off midweek, with cargoes for most light, medium and heavy sour crude grades loading from the Persian Gulf seen in discounts to their respective official selling prices.

Qatar Petroleum's tender for Al-Shaheen crude was reportedly awarded in a range of $2.50/b to $2.90/b over Platts front-month Dubai crude assessments, effectively setting a ceiling for the medium sour basket for the month.

Cargoes of light sour grades such as Murban, Das Blend and Umm Lulu were trading in deep discounts to their respective OSPs, said traders.

The Platts Market on Close assessment process on Thursday saw five offers for various cargo grades, with four offered down to discounts ranging from minus 30 cents/b to minus 60 cents/b to their respective OSPs.

Two of these offers were traded in the MOC, with BP buying Total's offer of Das Blend crude at OSP minus 60 cents/b, and Shell buying Unipec's offer for Qatar Marine crude at OSP minus 25 cents/b. Das Blend is a light sour grade, while Qatar Marine is medium-heavy in API.

Meanwhile, inter-month spreads for Dubai futures held steady from Thursday's assessed levels, but were softer day on day.

The February/March Dubai spread was pegged at 79 cents/b at 11 am in Singapore on Friday, unchanged from the 4:30 pm (0830 GMT) assessment on Thursday. The March/April spread was pegged at 83 cents/b Friday morning, up a notch from the 82 cents/b assessed Thursday.

Market participants expect more tenders and deals to be concluded by the end of Friday's trading session in Asia, they told S&P Global Platts. Thailand's PTT is seeking sour crudes in a spot tender for March, while Iraq's SOMO is expected to award an additional 2 million barrels of Basrah crude on an Asia OSP pricing basis within this week. Other tenders are also expected to be issued as the day wears on.
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