CRUDE MOC: Demand for medium sour crude lifts Middle East structure out of contango

Singapore — Buy-side interest finally emerged in the Middle East sour crude market, more than half way through the month, with demand from China's independent refiners for medium sour grades flipping Dubai's cash/futures spread into backwardation after just a week in contango.

The April Dubai cash/futures spread was assessed at a premium of 6 cents/b at the end of the Platts Market on Close assessment process on Monday, at 4:30 pm in Singapore (0830 GMT). The spread rose from minus 13 cents/b assessed on Friday, Platts data showed.

Chinese independent refiners picked up several million barrels of Upper Zakum and Oman crude Monday, specifically Rongsheng, an independent refiner and petrochemicals producer based in Zhejiang, China. Further tender details were still emerging Monday evening in Asia.

Cash Oman's spread to April Dubai futures -- which had rallied Friday to 37 cents/b at the close -- rose further to a premium of 55 cents/b on Monday.

But market sentiment remained precarious, traders warned, with demand relatively weak month on month, as evidenced by an offer for medium sour crude in the MOC on Monday.

ExxonMobil offered a cargo of April-loading Upper Zakum down to a discount of 90 cents/b under its OSP. Exxon had previously offered a similar cargo with a slightly different loading period in April down to a discount of 70 cents/b. The offer saw no buying interest Monday.

Light sour sentiment also remained in deep discounts, and offers continued to be placed in the Platts MOC demonstrating so. Total offered a cargo each of ADNOC's light sour Murban and Das Blend crudes in Monday's process.

Total offered both cargoes down to minus 90 cents/b under their respective OSPs. No takers were seen for the crude cargoes by the end of the MOC at 4:30 pm SGT.

Monday's MOC saw five partial trades for April Dubai, and the month's first Oman partial trade. The Oman partial was offered by Unipec and picked up by Shell. This brings the total partials count for February to 63, with 62 of these Dubai partials.