Dubai average retreats 10.5% on month, Saudi seen making further cuts to OSPs
Quantum Commodity Intelligence - The December monthly average price for benchmark Middle East Dubai crude was down by over 10% versus the previous month, according to Quantum data Friday, extending the weaker trend that has been in place since the summer pricing peaks.
Quantum's monthly average price for February-loading Dubai was $77.19/b, a fall of 10.5%. That compares with $86.22/b for January-loading crude and the 14-year high of $113.24/b for August-loading barrels traded during June.
The highest December assessment of $81.35/b was registered on the first day of the month, which was followed by a steep decline to a fresh yearly low of $71.81/b on 12 Dec. and a subsequent but gradual recovery.
Most of the losses came in the first full trading week of December as prices tumbled 11% despite markets initially trading higher following the OPEC+ meeting. But the initial price bounce proved short-lived as markets took a downturn on growing fears that weak economic growth would have a detrimental impact on oil demand next year.
A number of recessionary warnings also came, including Goldman Sachs CEO David Solomon warning "economic growth is slowing," while JPMorgan's CEO Jamie Dimon flagged the possibility of a "mild to hard" recession.
However, oil prices found support in the second half of the month amid a further relaxation of Covid restrictions in China and possible disruptions to Russian exports.
The latest IEA monthly report also provided the lift after the Paris-based agency said prices could increase next year as Russian exports drop in the face of sanctions and the price cap. The IEA forecasted oil demand growth of 1.7 million bpd in 2023, up 100,000 bpd from its previous report.
The December 2022 monthly average was around $4/b over the December 2021 average of $73.18/b
Friday's Dubai cash assessment for February delivery was $78.76/b, up just 2% from the 2021 close of $77.10.
Structure
Meanwhile, the key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle East National Oil Companies (NOCs), averaged $1.26/b in December compared to $2.81/b in November, flagging another cut in Official Selling Prices (OSPs) for February-loading barrels by Saudi Aramco and other regional producers.
Medium sour grades such as Oman, Upper Zakum and Al Shaheen were changing hands at Dubai swaps plus $1/b during the second half of November, while traders said the flagship Saudi Arab Light would likely be cut by at least $1/b from the current level of Platts Dubai/DME Oman +$3.25/b.
Asia cash January Brent averaged $81.33/b over the month based on the 4:30 pm Asia close, down 11% from last month's average of $91.41/b, while the Brent/Dubai cash spread narrowed to an average of $4.14/b, compared to last month's average of $5.18/b.
US WTI averaged $76.50/b based on the 4:30 pm Singapore marker price, down from $83.97/b the previous month, as US crude proved slightly more resilient over the month.
On an annual basis, Dubai averaged $96.38/b versus Brent at $99.10/b and WTI at $93.52/b, based on the Singapore timestamp for the month+2 contract.
For a full Dubai and crude oil pricing history, visit Quantum's pricing pages.
