Brent/Dubai spread narrows despite softer US rhetoric

Singapore — Benchmark Dubai crude futures' discount to ICE Brent narrowed during midmorning trading in Asia Thursday, despite a retreat in global crude prices after toned down rhetoric from the US emerged late Wednesday, easing the risk of further attacks in the Middle East.

The March Brent/Dubai Exchange Futures for Swaps (EFS) spread narrowed to be pegged at $2.15/b Thursday morning, down from $2.22/b assessed at the close of trading in Asia on Wednesday.

The spread tightened as Brent fell more than Dubai futures in response to the US President Donald Trump's latest comments, said market watchers.

"Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world," Trump said, adding: "No American or Iraqi lives were lost because of the precautions that were taken."

Front-month March Brent futures were seen pegged at $65.92/b at 11 am on Thursday (0300 GMT) in Singapore, down from $69.10/b at the Asian close (0830 GMT) Wednesday.

Dubai futures also fell, but resisted a full retreat as market participants awaited confirmation of Middle East crude supplies from Iraq, which has been caught in the middle of the latest US-Iran hostilities.

Iraq's SOMO is expected to confirm allocations for February loading cargoes of its Basrah crude to buyers in the coming days. The market in Asia will remain somewhat jittery until then, said traders.

March Dubai futures were pegged at $63.77/b Thursday morning, down from $66.88/b assessed on Wednesday.

Dubai intermonth spreads, or the Dubai market structure, weakened alongside easing risk sentiment in global crude markets. The February/March Dubai futures spread fell to a backwardation of 87 cents/b Thursday morning in Asia, while it was assessed at 97 cents/b at 4:30 pm in Singapore on Wednesday.

The March/April spread was pegged at 85 cents/b, falling from an assessed 96 cents/b Wednesday.

-- Eesha Muneeb, eesha.muneeb@spglobal.com

-- Edited by Manish Parashar, newsdesk@spglobal.com