Dubai crude ends week lower despite Friday rebound
Quantum Commodity Intelligence - Middle East benchmark Dubai crude eased slightly over the week, despite having rebounded strongly on Friday to claw back most of the week's earlier losses.
Front-month Dubai cash for January delivery was assessed by Quantum at $91.04/b in the week ending 12 November versus $92.29/b the previous Friday, down 1.35%.
Sentiment in Asia was largely determined by China's likely Covid policy heading into 2023, with indicators from Beijing coming full circle over the course of the week.
Monday started on a positive note amid reports that China was set to relax Covid restrictions in the new year, but this was quickly quashed as officials reiterated the country's zero-Covid policy would remain in order to tackle the latest outbreaks.
Health authorities warned that the situation was set to become even "more severe and complex" amid the winter flu season, which was seen as extinguishing any lingering hopes of a shift in policy.
However, by Friday, China announced major changes to its strict Covid-19 measures for inbound travellers, reducing quarantine on arrival and relaxing some domestic measures.
Global oil prices also came under pressure midweek after the EIA reported US commercial crude oil inventories increased by 3.9 million barrels last week, while US production levels rose by 200,000 bpd to a two-month high of 12.1m bpd.
But again, this was quickly neutralized by Thursday's release showing using inflation eased to 7.7% in October, helping international oil prices to finish the week on a firm footing.
However, Dubai lost further ground to its North Sea light sweet Brent counterpart, as upcoming Russia sanctions and a potential winter diesel crunch again lifted European prices at a faster pace.
Structure
The prompt Dubai market structure, however, remained under pressure as the key M1/M3 spread (Jan23/Mar23) dipped to around $3.65/b on Friday, compared to last week's $4.15/b for the same spread, indicating that Asian demand remains comparatively sluggish heading into the new year.
Premiums for flagship medium sour grades, including Oman, Upper Zakum and Al Shaheen, were also seen drifting lower with buying interest at around Dubai swaps plus $3.60-$3.70/b.
ICE Brent futures for Jan23 were priced at $96.01/b at the Asia close Friday (1630 Singapore), down $0.45/b on the week for the same contract month, or just under 0.5%. The Brent/Dubai Jan23 spread widened to around $5/b on Friday, compared to $4.15/b last week, but off from the week's five-month high of $5.45/b.
DME Oman futures at 1630 Singapore time were 1.35% lower at $91/b for the Jan23 contract, again largely tracking cash Dubai.
Light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange were down 0.8% to close the Singapore week at $94.74/b for Jan23, around a $1.25/b to Brent.
