Murban sets Dubai assessment as lighter-crude values sink
Quantum Commodity Intelligence – The Dubai crude oil benchmark was set Wednesday by a rare nomination of a Murban cargo via the Platts partials price-discovery window, as values for light-sweet Murban slumped below medium-sour grades.
Sources said that Phillips66 declared the flagship Abu Dhabi grade to Vitol on convergence following the transaction of 20 partials, each of 25,000 barrels.
After reaching 500,000 barrels between two counterparties, the seller can declare one of the 'Dubai basket' grades, namely Dubai, Oman, Upper Zakum, Al Shaheen and Murban, while the buyer is obliged to accept the nomination.
In practice, this will be the least-valuable grade, which for most of this year has been Upper Zakum. However, Oman and Al Shaheen have also regularly featured on nomination as similarly-priced grades to Upper Zakum.
At around 40.0 degrees API gravity and 0.7% sulfur, Murban yields a higher percentage of gasoline and distillates compared to medium sour crude, and is comparable in quality to North Sea Forties crude.
Upper Zakum, which had been setting the Dubai quote for most of April is around 34.0 degrees API gravity and 1.85% sulfur. Qatar's Al Shaheen (29.0 API, 1.85% sulfur) and Oman (31.0 API, 1.4% sulfur) are in the same medium-sour category.
Exchange data Wednesday showed Murban futures trading on Abu Dhabi's IFAD exchange settling at $80.11/b, while Jun23 ME Oman futures closed at $80.69/b, as traders blamed weakness in the distillates sector and lower gasoline cracks.
Sources said medium sour availabilities also tightened after Middle East producers announced further production cuts of around 1 million bpd from May, as part of a 1.15 million bpd package of OPEC+ cuts.
Products
Benchmark 10ppm Asian gasoil cracks versus Brent slumped to 15-month lows of under $14/b this week, in turn dragging down Murban values.
Gasoline cracks have also come off hard, slumping from almost Brent +$20/b at the start of the April to three-month lows of below $10/b on Wednesday, based on Quantum front-line swaps data.
By contrast, HSFO cracks have seen something of a renaissance this year, rallying from around $25/b under Brent in early February to a discount of $10/b by late April.
Traders said this is the first time medium sour grades have priced above Murban since the oil-price collapse during the second quarter of 2020, when Murban set the Dubai assessment for several weeks as the lowest of the 'Dubai basket' grades.
However, Murban can occasionally feature as a convergence grade once the Quality Premium (QP) is factored in, which acts as a 'rebate' for the seller when nominating the usually superior-quality grade.
Platts previously set the QP at 60% of the net price difference between its front-month cash Murban assessment and Platts front-month cash Oman assessment during the full month prior to the announcement.
But the methodology was amended from February of this year, whereby the Murban QP is now calculated as 50% of the observed price difference between Platts Murban and Platts Oman 15 business days prior to the day of publication.
