Dubai crude tumbles 7% on week, structure at 10-month low
Quantum Commodity Intelligence - Middle East benchmark Dubai crude retreated sharply over the week as concerns over sluggish Asian demand and the wider economic malaise dampened sentiment.
Front-month Dubai cash for January delivery was assessed by Quantum at $84.35/b in the week ending 18 November versus $91.04/b the previous Friday, down 7.35%. However, prices dropped even further after Asian markets closed.
Crude prices started the week on a bearish note as mixed messages from China over its Covid policy continued to cause uncertainty. The previous week's optimism that China would start unwinding its zero-Covid policy was quickly dampened as Beijing made it clear tackling the current outbreaks remained its priority.
Sentiment was further rocked Tuesday after the IEA said demand growth will slow to 1.6m bpd in 2023, down from 2.1m bpd this year, as mounting economic headwinds impede growth. Additionally. OPEC made another cut to its global oil demand growth forecast, shaving around 100,000 bpd from its projections for 2022 and 2023.
Markets staged a midweek rally on raised geopolitical tensions, although the bounce proved short-lived as oil flows via Russia's Druzhba pipeline quickly returned.
Dubai lost further ground to its North Sea light sweet Brent counterpart, as upcoming Russian sanctions and a potential winter diesel crunch again lifted European prices faster.
Quantum assessed the Brent/Dubai cash spread for January at $5.95/b on 16 November at the 1630 Singapore market close, the widest spread since late May when the then front-line Jul22 spread briefly topped $7/b.
Structure
The prompt Dubai market structure remained under pressure as the key M1/M3 spread (Jan23/Mar23) slumped to $2.05/b on Friday, compared to last week's $3.65/b for the same spread and the narrowest for 10 months.
Premiums for flagship medium sour grades, including Oman, Upper Zakum and Al Shaheen, also slumped to the lowest levels since January, with buying interest by Friday at around Dubai swaps +$2-2.20/b.
ICE Brent futures for Jan23 were priced at $90.01/b at the Asia close Friday (1630 Singapore), down $5.84/b on the week for the same contract month, 6.25%.
DME Oman futures at 1630 Singapore time were 7.5% lower at $84.17/b for the Jan23 contract, again largely tracking cash Dubai.
Light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange were down 6.2% to close the Singapore week at $88.89/b for Jan23, around a $1.10/b discount to Brent.
