Dubai crude falls 1.5% on week as US offsets Asia outlook
Quantum Commodity Intelligence - Middle East benchmark Dubai crude registered modest losses of around 1.5% on the week, as bearish indicators from the US outweighed what was otherwise a positive week in terms of demand outlook from Asia.
Quantum assessed front-month Dubai cash for April delivery at $82.24/b in the week ending 17 February, versus $83.55/b for the same contract the previous week Friday, for a fall of 1.57%
Asian markets failed to build on the previous week's 5% gains, with markets initially rocked after the US Dept. of Energy flagged a sale from Strategic Petroleum Reserves (SPR) of 26 million barrels to be delivered from 1 April to 30 June.
This was followed by a crude inventory build of over 16 million barrels, while consumer and producer inflation figures from the US-flagged further concerns, increasing the likelihood of additional Fed monetary tightening.
Markets largely batted away the latest monthly report from OPEC, as the producer alliance raised its forecast for oil demand this year by 100,000 bpd from its last estimate.
The organisation now sees global oil growth of 2.3 million bpd to reach 101.87 million bpd in 2023, with around 2 million bpd from China, non-OECD Asia and the Middle East.
"Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions and the effect this will have on the country, the region and the world," OPEC said in its February report Tuesday.
The IEA sees oil demand growth of 2 million bpd this year to a new record 101.9 million bpd fuelled primarily by a resurgent China, and also lifted its supply outlook on non-OPEC+ growth.
The IEA forecast for oil demand is 100,000 bpd higher than its report last month, with China accounting for around 900,000 bpd of growth this year.
Physical
Keen demand from China and Russia's announcement that it will reduce output by 500,000 bpd next month helped shore up premiums for physical barrels, which consolidated around three-month highs.
Flagship medium-sour grades, including Oman, Upper Zakum and Al Shaheen, were all quoted at Dubai swaps +$2-$2.50/b for April loading, with the higher levels applicable to cargoes loading early in the month, reflecting the backwardation.
The prompt Dubai structure was steady as the M1/M3 (Apr23/Jun23), used by National Oil Companies in OSP calculations, was assessed at $2.11/b, albeit slightly lower on the week.
ICE Brent futures for Apr23 were trading at $83.60/b at the Asia close Friday (1630 Singapore), down $1.80/b on the week, or 2.1%. The Apr23 Brent/Dubai cash spread narrowed from $1.85/b to $1.35/b, as medium sour barrels strengthened on news of the Russian cut, with Urals exports largely landing in India.
DME Oman futures at 1630 Singapore were 1.7% lower at $82.22/b for the Apr23 contract, as Oman futures largely matched cash Dubai over the week.
Light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange fell 1.8% to end the Singapore week at $82.91/b for the Apr23 contract.
