CRUDE MOC: Dubai structure firms on highly probable OPEC+ cuts

Singapore — Structure for the Middle East sour crude market continued to firm this week, with contango moving closer to parity by the end of the Platts Market on Close assessment process on Tuesday in Asia.

The May Dubai cash/futures spread was assessed at minus 4 cents/b at 4:30 pm in Singapore (0830 GMT), up from minus 13 cents/b on Monday.

Sentiment for Middle East sour crude trading improved day on day, but cautiously, evidenced by a slow rise in intermonth spreads for Dubai cash and future curves.

Meanwhile, structure for May Oman remained steady compared to Monday. May cash Oman's spread to May Dubai futures was assessed at 15 cents/b, unchanged day on day.

The Middle East sour crude market digested the likelihood of OPEC+ production cuts with the producer group heading into a key meeting later this week. A new supply cut agreement could see crude volumes from the alliance falling anywhere between 600,000 to 1 million b/d, according to reports emerging ahead of the meeting.

Tuesday's Market on Close assessment process for Middle East sour crude saw five May Dubai partials traded on Monday, with Shell and Unipec on the sell side, and Total, PetroChina and Vitol buying.

Each partial is 25,000 barrels in size. A convergence occurs when 20 partials are traded between two counterparties, resulting in a full 500,000 barrel physical cargo being declared from the seller to the buyer.

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.

The quality premium for May-loading Murban crude oil is 87.45 cents/b, and will be effective for trade in May-loading cargoes during the MOC assessment process through March.