Middle East sour crude market stalls after brief demand spurt

Singapore — Spreads for Dubai crude futures were rangebound Tuesday morning in Asia trading, with buying interest receding after a brief spate of market activity at the start of the week, crude traders told S&P Global Platts.

Demand from independent refiners in China lifted the sour crude complex Monday, with petrochemical producer Rongheng picking up three million barrels of medium sour crude off the spot market via a buy tender.

Other than that, buying interest was largely absent from the wider spot market, sellers told Platts Tuesday morning. Dubai inter-month spreads barely moved between Monday's close and Tuesday's open as market participants looked to a few key ongoing tenders for cues to buy-side sentiment.

Qatar's tender offering Al-Shaheen, Land and Marine crude cargoes is expected to be awarded late Tuesday, with traders keeping a close eye on any related pre-tender activity for the same grades in the spot market, they said.

Buyers are likely to emerge on the market after the tender results are issued, they added.

Meanwhile, Dubai spreads remained steady Tuesday morning in Asia, with the March/April inter-month spread ticking up 1 cent to minus 13 cents/b at 10 am Singapore time (0200 GMT), from the minus 14 cents/b assessed at Monday's 0830 GMT close.

The April/May spread was unchanged Tuesday morning in Asia, from Monday's assessed 1 cent/b.

The April Brent/Dubai Exchange Futures for Swaps spread narrowed slightly after widening on demand resurgence in Europe that proved supportive for the Brent end of the complex.

The EFS, which was assessed at $1.44/b Monday evening in Asia, narrowed to $1.33/b by 10 am in Singapore the next morning.

At sub-$3/b levels, the EFS would point to an open arbitrage between the North Sea and East Asia, but traders reported that most arbitrage flows of compatible grades into Asia were unworkable at the moment. Low demand and competitive pricing on Middle East grades was the main reason, they said.