Dubai crude gains over 2% on week, loses ground to soaring Brent
Quantum Commodity Intelligence - Middle East benchmark Dubai crude rebounded following two weeks of consecutive falls, as concerns over a potential winter supply crunch aided the recovery, but reports of a resurgence in China's Covid cases capped further gains.
Front-month Dubai cash for December delivery was assessed by Quantum at $92.64/b in the week ending 28 October versus $90.70/b the previous Friday, up 2.14% on the week.
However, the Middle East sour crude benchmark lost further ground to its North Sea light sweet Brent counterpart, as upcoming Russia sanctions and a potential winter gasoil crunch lifted European prices at a faster pace.
The week started on a sluggish note after news from the 20th National Congress of the Chinese Communist Party made it clear there would be no change in the zero-Covid policy, while little came in the way of likely fresh stimulus policy.
Oil prices came also under pressure in the early part of the week after data showed sluggish economic growth from China, while western economies fared little better.
But sentiment took an upturn midweek after US figures showed strong US oil exports, while concerns again loomed over a winter diesel squeeze impacting both Europe and the US, which could also drag in Asia. EIA figures revealed US crude oil and refined products exports surged last week to a new record of 11.4 million bpd, including 5 million bpd of crude.
Tightening diesel in Europe also gave a lift to Asia refining margins, as the price spread between diesel cargoes loading in Asia and the price of diesel barges delivered into northwest Europe soared to the highest level since the early days of the Russia-Ukraine war, according to data collected by Quantum.
Structure
The prompt Dubai market structure, however, softened over the week, as the key M1/M3 spread (Dec22/Feb23) dipped to $4.08/b on Friday, compared to last week's $4.67/b Friday for the same spread, indicating relatively sluggish demand for the remainder of the fourth quarter.
ICE Brent futures for Dec22 were priced at $96.55/b at the Asia close Friday (1630 Singapore), up a healthy $3.67/b on the week, or 3.95%. The Brent/Dubai Dec22 spread widened to a three-month high of $3.90/b, compared to $2.20/b last week.
The Dec22 Brent/Dubai EFS was at a three-month high of around $8/b, while the Jan23 EFS also topped $8/b on Friday, making Brent-priced imports more expensive for Asian refiners.
DME Oman futures at 1630 Singapore time were 2.2% higher at $92.25/b for the Dec22 contract, slightly losing ground to cash Dubai heading into the contract expiry.
Light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange were up 2.2% to close the Singapore week at $94.43/b for Dec22, dropping to a discount of around $2/b versus soaring Brent futures.
