Brent/Dubai cash spread, EFS tumble to 3-week lows as maintenance ends
London (Quantum Commodity Intelligence) – The Brent/Dubai cash spread and the Brent/Dubai EFS moved sharply lower over the past week, reflecting the relatively weaker July Brent market compared to June when North Sea production will be under peak maintenance season.
Quantum assessed July Brent/Dubai cash at $2.03/b Thursday, the lowest level since April 19, while the July EFS has been at $3.14-$3.15/b for the last two days, also the lowest level since April 19.
The June EFS and cash spread were already riding high at a one-year highs in mid-April on expected tight North Sea availabilities.
But a force majeure declared at the Libyan port of Hariga on April 19 saw the North Sea Brent benchmark pull ahead of Dubai.
Libya's flagship Es Sider is a light sweet crude, comparable to North Sea crudes.
The force majeure helped further bolster the Brent market, with the Brent/Dubai EFS hitting a 17-month high of $3.74/b on April 26, while the June Brent/Dubai cash spread hit fresh one-year highs of $3.04/b, according to Quantum data.
North Sea maintenance
Loading schedules for June puts Forties crude output at just two cargoes of 600,000 barrels each, said traders, compared to around 15 in a full-production month.
Maintenance in the North Sea is conducted during the summer months to avoid adverse winter conditions in the North Atlantic
Libya's force majeure was called off April 26, which took some of the pressure off the North Sea market.
The EFS is used as measure of light sweet crude against medium sour, for calculating West/East values and for long-haul arbitrage opportunities.
A wider spread typically makes Middle East crude and other grades pricing against Dubai (or Dubai/Oman) more attractive to Asian refiners, while crude from the North Sea or West Africa becomes more expensive.
