CRUDE MOC: Dubai moves lower as buyers wait out discounted market

Singapore — The April cash Dubai premium over futures fell Thursday, with buyers of Middle East sour crude looking comfortable waiting on the sidelines of a well-supplied, well-discounted market, said traders.

The April Dubai cash/futures spread was assessed at 47 cents/b at the end of the Platts Market on Close assessment process on Thursday, down 11 cents/b from 58 cents/b on Wednesday. The spread was last assessed lower at 43 cents/b on March 4, 2019, according to S&P Global Platts data.

"There was low demand in the market last month and the buyers learned from their experience so they are in no rush to buy, there is plenty of supply as far as they are concerned," said one seller of Middle East crude oil on Thursday.

Market participants spent the better part of the week digesting official selling price releases from several Persian Gulf producers, with price differentials for nearly all grades so far seeing generous price cuts.

Still, traders said market levels have continued to fall at a rapid pace since the end of January, likely ensuring a discounted market for April loading cargoes this month.

Saudi Aramco cut the official selling price differentials for four out of its five crude grades loading in March and heading to Asia, the company said in a notice late Wednesday.

It slashed the price differential for its Arab Light crude by 80 cents/b, and that for Arab Extra Light by $1.70/b from the February OSP differential.

The Saudi Arab Extra Light and Arab Light crude OSP differentials are now at parity, which could put further pressure on price levels of other light crude grades available in the spot market. ADNOC's light sour Murban crude is often directly compared with Arab Extra Light price-wise.

Traders said April loading cargoes of the Abu Dhabi crude could trade anywhere between minus 50 cents/b down to minus $1/b this month, after taking into account allocations, product margins and spot market requirements.

Last month, Malaysia's Petronas reportedly picked up a total of 13 Murban cargoes in the spot market, undoubtedly helping clear some of the overhang left over for the grade in the March pool.

"But this is not something we can rely on, on a monthly basis," the trader added, pointing to the ad-hoc nature of some spot market tenders.

Meanwhile, the Platts Market on Close assessment process saw two Dubai partials change hands Thursday, bringing the total partials count so far to 18.

Under the partials trading mechanism, the seller declares a full 500,000 barrel cargo to the buyer after 20 partials have been traded for the same loading month between the two companies.

For Dubai partials, the seller has the option to deliver a Dubai, Oman, Upper Zakum, Al-Shaheen or, with a quality premium, Murban cargo to the buyer.