Dubai retreats 5% on month, Saudi January OSPs seen sharply lower
Quantum Commodity Intelligence - The November monthly average price for benchmark Middle East Dubai crude was down over 5% versus the previous month, according to Quantum data Wednesday, following the broader weak trend since the summer pricing peaks.
Quantum's monthly average price for January-loading Dubai was $86.22/b, a fall of 5.4%. That compares with $91.13/b for December-loading crude and the 14-year high of $113.24/b for August-loading barrels traded during June.
The highest level of $92.90/b was registered on 7 November as prices initially strengthened in the early part of the month on fears of Russian supply shortfalls and a potential diesel crunch.
But sentiment took a bearish turn in the second half of the month amid record daily Covid cases in China, with around 20% of the country's GDP potentially impacted by widespread lockdowns and other restrictions.
The monthly and yearly low of $76.65/b came on 28 Nov., as Russian price cap talks stalled while traders said the higher level of $65/b to $70/b under discussion would do little to stem the flow of Russian crude oil, particularly to Asia.
However, sentiment improved again towards the end of the month on talk that OPEC+ could consider a further production cut, while China indicated it may do more to ease lockdowns.
Compared to the January contract traded in the same month last year, the monthly average was up nearly $6/b from $80.27/b, or around 7.5%.
Structure
Meanwhile, the key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle East National Oil Companies (NOCs), averaged $2.81/b in November compared to $4.75/b in October, flagging a near-certain cut in Official Selling Prices (OSPs) for January-loading barrels by Saudi Aramco and other regional producers.
Medium sour grades such as Oman, Upper Zakum and Al Shaheen were changing hands at Dubai swaps plus $1-$2/b during the second half of November, while traders said the flagship Saudi Arab Light grade could be cut around $2/b from the current level of Platts Dubai/DME Oman +$5.45/b
Asia cash January Brent averaged $91.41/b over the month based on the 4:30 pm Asia close, down a more modest 2.3% from the Dec22 average of $93.26/b, while the Brent/Dubai cash spread widened to an average of $5.18/b, compared to the Dec22 contract average of $2.13/b.
The monthly spread widened to the highest level in 30 months over warnings of a winter supply squeeze in Europe once further Russian sanctions set in, while Asia absorbs any excess Russian barrels.
US WTI for Dec22 averaged $83.97/b based on the 4:30 pm Singapore marker price, down from $86.10/b the previous month, as light sweet crudes again outpaced medium sour grades such as Dubai and Oman.
For a full Dubai and crude oil pricing history, visit Quantum's pricing pages.
