CRUDE MOC: Dubai structure down to 13-month low ahead of April trading kickoff

Singapore — The April Dubai cash/futures spread was assessed at 20 cents/b on Friday, a 13-month low, as traders in the Middle East sour crude market braced for sharply weaker April spot demand from refiners in Asia.

April cash Dubai's premium over futures fell from 88 cents/b at the start of the week on February 3, down by around 77%. The spread was last assessed lower at 14 cents/b on January 14, 2019, according to S&P Global Platts data.

Crude traders are bracing for a likely contango in the Dubai cash/futures structure -- also known as the M1/M3 spread -- they told Platts Friday. Although the Dubai structure has flipped into contango for brief periods in the last couple of years -- for a day in January 2019, and a full month in March 2018 -- the last extended "contango phase" for Middle East crude oil markets occurred between June 2016 and September 2017, Platts records show.

The premium for April cash Oman over Dubai futures fell in tandem, being assessed at 35 cents/b at the end of the Platts Market on Close assessment process for Middle East crude on Friday, down from 52 cents/b on Thursday.

Traders of sour crude expect spot price differentials to be firmly entrenched in deep discounts when trading momentum starts to pick up pace next week, they told Platts.

Market focus flicked back and forth between weakening predictions for Chinese oil demand in Q1 2020, to Russia's standoff with OPEC+ on a 600,000 b/d additional supply cut agreement.

Friday's MOC process saw seven Dubai partials change hands, bringing the total partials count for the week to 25.

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.