Crude MOC: Cash Dubai eases on weaker demand cues

Singapore — Benchmark cash Dubai eased at the start of the week Jan. 18 as demand cues for March-loading trade continued to stay weak.

S&P Global Platts assessed March cash Dubai at a premium of 31 cents/b to the same-month Dubai futures, down 4 cents/b from the close on Jan. 15.

Similarly, March cash Oman was also valued at a premium of 31 cents/b to front-month Dubai futures, down 4 cents/b from the previous day.

Market participants had their eyes on the result of the Indian Oil Corp. tender, which closed Jan. 15. The refiner was heard to have bought four million barrels of Bonny, Forcados and Bonga March-loading crude, as well as one million barrels of Das Blend crude.

With arbitrage barrels preferred over Middle East crude, traders expect demand in the spot market to remain sluggish.

A 500,000 barrel cargo of March-loading Umm Lulu crude was sold to an Indian buyer by a European oil company. The cargo was heard to have traded at a discount to the grade's official selling price.

However, market participants see the recent purchases of Middle East crude providing a bottom to spot differentials, which remain discounted due to a weaker demand outlook.

"Don't think there was much Das cargoes left in the market. Maybe the grade will see nominal discounts than other Middle East grades," said a trader in Singapore.

The term supply cuts by Saudi Aramco have stirred up limited interest in the spot market as most Asian countries deal with COVID-19 outbreaks and refinery turnarounds.

"Japan is dealing with more widespread lockdowns due to the virus, and turnaround season too starts in March and April," said a trader in Singapore, indicating lesser likelihood of buying other Middle East grades.

The Platts Market on Close assessment process on Jan. 18 saw four 25,000-barrel Dubai partials traded, with Shell, Unipec and Reliance on the sell side and Total on the buy side.

No convergence has been declared in January so far.

A convergence occurs when 20 partials are traded between two counterparties, resulting in a full, 500,000-barrel physical cargo being declared from the seller to the buyer.