Qatar issues Al Shaheen tender, premiums under pressure
Quantum Commodity Intelligence – QatarEnergy has issued a sell tender for its keenly-watched Al Shaheen grade, with premiums for the Middle East medium sour grade seen hovering at around the lowest levels in over two years.
Qatar is offering the standard three cargoes, spread over the month of August, with bids closing on 14 June and valid until 15 June.
Trading sources said the grade could be sold at premiums similar to last month, when the state-owned firm awarded five cargoes ranging from as low as +$0.80/b versus the underlying Dubai swap for late-month cargoes, to around +$1.05/b for early-July cargoes, reflecting the backwardation.
Physical markets so far have found little support after Saudi Arabia announced a 1 million bpd cut for July, as spot demand remains relatively subdued.
However, Al Shaheen may attract interest from a trader looking for 'ammunition' in the Market-on-Close trading window, with the grade deliverable against Dubai, market sources said.
So far 26 cargoes have been transacted via the MOC this month, all Oman so far but Al Shaheen could feature later in the month.
Bellwether
The regular monthly tender from Qatar is seen as a bellwether for the Middle East medium-sour crude market, as the grade is a component of the Dubai 'basket' of crudes, regularly setting the price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.
The expected premiums are largely a function of the market structure, as Al Shaheen prices during the month of loading, so it includes two months of backwardation – hence during the loading month of August, October is the trading month for Dubai.
So far in May, the M1/M3 (Aug23/Oct23) Dubai cash spread has averaged $0.75/b and is currently valued at around $0.65/b.
Al Shaheen is also seen as a guide for Saudi Aramco's flagship Arab Light OSP, which traders said is on course for a likely reduction on August-loading crude from the current Platts Dubai/DME Oman +$3/b.
The state-owned energy producer also issued tenders for one cargo each of Qatar Land and Marine grades.
QatarEnergy set the OSP for Qatar Marine for July at a discount of $0.10/b versus Platts Dubai/Oman, down $1.05/b June barrels, while Qatar Land was reduced by $0.85/b to +$0.10/b.
