Qatar Petroleum sells Al Shaheen at slightly lower premiums
London (Quantum Commodity Intelligence) – Qatar Petroleum (QP) has awarded its monthly Al Shaheen tender for June at slightly lower premiums versus May, trading sources said Friday.
The Al Shaheen tender is closely watched as it acts as a price indicator for the Middle East medium sour crude market and is also a component of the Dubai 'basket' of crudes, for which it regularly sets the price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.
The three cargoes, one in early June and two loading late June, were heard awarded at around Dubai +$1.15-$1.25/b, which was lower than the May-tender cargoes awarded last month at around +$1.50/b.
Most of the premium reflects the market structure, as June-loading cargoes are priced against Dubai assessments during the month of June - when August is the front-line month for Dubai.
On Friday, Quantum assessed the M2-M4 (Jun-Aug) Dubai spread at $1.05/b, which automatically gives Al Shaheen a premium of $1.05/b against the underlying June price - which is also referred to as the June Dubai swap.
As a deliverable grade into the Dubai mechanism, Al Shaheen cannot price below Dubai on a like-for-like basis, although it may trade at a negative differential in a contango market.
Although the Dubai backwardated structure widened slightly over the past week, Dubai has lost value against Brent during April as the North Sea benchmark is pulled higher by firm gasoline cracks.
Quantum assessed the Brent/Dubai EFS at above $3/bl for the past 5 days (April 12-16), close to a 13-month high. On a cash-versus-cash basis, June Brent is trading at around $2/b over Middle East grades such as Dubai, Oman, Upper Zakum and Al Shaheen – which are all deliverable grades against the Dubai benchmark, along with the light sweet Murban blend.
At close of business Friday in Asia (1630 Singapore) Quantum assessed June cash Al Shaheen at $65.10/b, at parity with Dubai. Traders said Upper Zakum and Al Shaheen are the most likely grades to set the Dubai assessment this month, hence Quantum valuing both grades at around Dubai parity.