Middle East crude complex softens amid bearish macroeconomics

Singapore — The Middle East sour crude complex led by benchmark Dubai crude futures moved lower in mid-morning trade in Asia Tuesday, stymied by bearish sentiment across global markets as the death toll from coronavirus continues to rise in China.

Market structure for the Dubai complex, also known as the Dubai cash/futures spread, dropped below $2/b for the second time in January in mid-morning trade Tuesday after nearly four months of $2/b-plus backwardation, S&P Global Platts data showed. The spread was pegged at $1.97/b as of 11 am in Singapore (0300 GMT) Tuesday, compared with $2.01/b assessed Friday at 12:30 pm (0430 GMT).

The cash/futures spread touched $1.89/b on January 2 before returning to the $2/b-plus range until Monday. Prior to January, the spread was last assessed below $2/b on September 13 last year at $1.93/b, according to Platts records.

Intermonth spreads for Dubai futures also opened on a softer note in Asia Tuesday after Lunar New Year holidays across Asia. The February/March Dubai intermonth spread was pegged at 81 cents/b as of 0300 GMT Tuesday, down from 85 cents/b assessed at 0430 GMT Friday. Similarly, the March/April spread was pegged at 72 cents/b Tuesday morning, down from 85 cents/b assessed on Friday.

Global crude prices fell $2-$3/b over the weekend in line with a downtrend across wider commodities markets as concerns grew about the impact of coronavirus on global economic growth and demand.

The death toll from the virus has pushed past 100 in China, according to media reports early Tuesday. National Lunar New Year holidays in China have been extended by three days to Sunday in an effort to contain

the spread.

The Brent/Dubai Exchange Futures for Swaps spread or EFS also narrowed mid-morning Tuesday to be pegged at $2.17/b at 0300 GMT. It was assessed at $2.23/b on Friday at 0430 GMT.