Dubai crude rebounds 6% in April, Saudi June OSPs seen mixed

Quantum Commodity Intelligence – The April monthly average price for benchmark Middle East Dubai increased by over 6% versus March, according to Quantum data, with early-month gains offsetting losses in the second half.

The Quantum average price for Dubai was 6.3% higher versus the previous month, averaging $83.41/for June-loading barrels versus $78.49/b on May-loading crude, with gains racked up in the first half of the month.

Prices surged higher in the opening week of April after several OPEC+ members announced output cuts from May, including around 1 million bpd from Middle East producers, of which compliance rates are expected to be close to 100%.

Positive momentum continued into the second week, buoyed by expectations of firm demand from China, including OPEC upping its forecast on China's demand for the rest of the year, which in turn pivoted Dubai above Brent for the first time in over six months.

Dubai posted a six-month high of $87.30/b on 13 April, having rallied around 23% from the lows registered at the height of the banking crisis in March.

However, sentiment quickly soured moving into the second half of April as renewed fears over sluggish growth, or even recession in the US and Europe, took hold. Tumbling diesel and gasoline cracks also weighed on physical markets.

Further retreats in distillate and gasoline cracks proved too much for Asian crude markets to fight back against, as Dubai slumped to a monthly low of $77.95/b on 27 April.

Benchmark 10ppm Asian gasoil cracks versus Brent tumbled to 16-month lows of under $12/b this week, while gasoline cracks also came off hard, slumping from almost Brent +$20/b at the start of the month to three-month lows of below $10/b, based on Quantum front-line swaps data.

Premiums for physical barrels also had changing fortunes over the month, as flagship medium-sour grades loading in June, including Oman, Upper Zakum and Al Shaheen, initially changed hands at Dubai swaps +$2-$2.40/b, falling to +$1.60-$1.90/b later on.

Structure

Meanwhile, the key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle Eastern NOCs, averaged $1.78/b in April compared to $1.65/b in March.

A wider M1/M3 would usually signal an increase in Official Selling Prices (OSPs), but traders are anticipating a small reduction in flagship Arab Light differentials from the current Dubai/Oman +$2.80/b, following the slump in refining margins.

However, market watchers expect larger cuts for Arab Extra Light with distillate and gasoline cracks under pressure this month, while premiums for Arab Medium and Heavy were seen steady to higher as HSFO cracks continued to improve.

Asia cash June Brent averaged $ 83.57/b over the month based on the 1630 Asia close, up 5.4% from last month's average of $79.30/b as heavier Middle East grades again outpaced the North Sea marker.

As such, the Brent/Dubai cash spread crunched to an average of 0.16/b, compared to $0.80/b in March.

US WTI averaged $79.57/b based on the 1630 Singapore June contract, up from $73.48/b the previous month for a gain of more than 8%, making it the top performer among benchmark grades.

For a full Dubai and crude oil pricing history, visit Quantum's pricing pages.