Prompt intermonths steady for Dubai crude though demand seen easing

Singapore — Prompt intermonth spreads for benchmark Dubai crude were steady mid-morning Jan. 25, despite demand for Middle East crude expected to ease as the month nears completion.

At 11 am in Singapore (0300 GMT), the March/April Dubai time spread was pegged at 29 cents/b, unchanged from the Asia close Jan. 22, S&P Global Platts data showed.

The April/May Dubai intermonth spread was pegged at 35 cents/b, up 2 cents/b from the previous day, the data showed.

Taiwan's CPC had issued a tender for purchase of Middle East crude. The refiner was heard to have bought two 500,000 barrel cargoes of March-loading Upper Zakum crude at nominal discounts to the grade's official selling price.

The previous week saw increased buying activity as several Asian buyers issued tenders for Middle East crude kicking off March-loading trade, which had remained fairly subdued.

"[I] think the Upper Zakum selling at small discount seems decent value. The grade was earlier trading at around a discount of minus 15 cents/b anyway," said a trader with a North Asian refiner.

Increase in market activity last week helped strengthen the sour complex, which in turn pushed spot differentials for some grades into small premiums, traders said.

However, with most tender buying activity having being completed, demand is likely to ease although the wider markets expect prompt spot purchases from refiners to help avoid a supply overhang.

Outcome of the tender issued by India's MRPL will also be keenly watched. The refiner issued a tender for purchase of one-million barrels of sour crude for delivery in March that closes Jan. 27, with validity until Jan. 29.

The front-month Brent/Dubai Exchange of Futures for Swap was valued at 86 cents/b mid-morning in Singapore on Jan. 25, up 5 cents/b from the Asian close on Jan. 22, Platts data showed.

The Brent/Dubai EFS is a key indicator of the spread between light, sweet and heavy, sour crudes, and a wide EFS makes crude priced against Dubai more economically attractive for Asian refiners compared to Brent-linked ones.