Dubai crude steady on week at around $75/b, MOC dominates trade
Quantum Commodity Intelligence – Middle East benchmark Dubai crude prices Friday were little changed on the week, as support from China helped prices rebound from lows and consolidate in the mid-$70s/b.
Quantum assessed front-month Dubai cash for August delivery at $75.45/b in the week ending 16 June versus $75.20/b for the same contract the previous week for a small gain of 0.3%.
The Middle East and Asian sour crude benchmark – the world's second most important oil benchmark after Dated Brent in terms of physical pricing – has been dominated by a surge of activity in the Platts MOC trading window, although so far the surge in trading has been relatively price neutral.
But Dubai in relation to other benchmarks remains well supported after Saudi Arabia announced at the start of the month it is slashing production by 1 million bpd in July to just 9 million bpd – with the threat of an extension looming over the market should prices remain sluggish.
Global oil markets over the last week have been largely supported by China on both a micro and macro level, including a fresh batch of crude import quotas and money-easing measures to stimulate the economy.
Asia prices came under pressure at the start of the week on concerns over the state of the US and European economies as markets geared up for Wednesday's Federal Reserve decision on interest rates. But the Fed, as expected, paused rate rises for now but is expected to add two more increases by year-end, while the Eurozone confirmed a 0.25% rate hike.
Physical
Physical-market activity during the first half of June has been dominated by the Platts-operated MOC window, which is on course for the most-liquid trading period since 2015. So far this month, some 17.5 million barrels of Oman have been transacted via the window in the form of 35 Oman cargoes, with the pace seen likely to continue for another two weeks.
China's Unipec has been the primary seller, with support from trading houses, including Vitol, while PetroChina heads the list of buyers, followed by Totsa with cameos from Shell and Trafigura.
The hectic Dubai trading activity though has done little for physical premiums though, with key medium sour grades, including Oman, Upper Zakum and Al Shaheen, valued at below Dubai +$1/b.
Likewise, the prompt Dubai structure has also struggled as the M1/M3 (Aug23/Oct23), which is used by National Oil Companies in OSP calculations, valued Friday at $0.80, little changed on the week.
ICE Brent futures for Aug23 were trading at $75.63/b at the Asia close Friday (1630 Singapore), down 0.3% versus last Friday's Asia close. The Brent/Dubai spread for August narrowed to the lowest in six weeks at around +$0.20/b, down from +$0.65/b last week, as heavier barrels outpaced lighter grades after the 1-million bpd Saudi cut.
DME Oman futures were largely tracking cash Dubai over the week, closing Friday at $75.36/b for Aug23, up 0.2% from last week.
Meanwhile, light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange for Aug23 were 0.2% higher on the week at $76.37/b.
However, VLCC tanker rates saw the sharpest move over the week, surging from below Worldscale 50 last to around WS 80.
Brokers reported a flurry of interest, also boosted by China issuing new crude import quotas this week, while other Asian refiners have turned to long-haul grades from the Americas and West Africa.
