DUBAI FUTURES: Brent/Dubai May EFS narrows; India issues buy tender

New York — Front-month exchange of futures for swaps narrowed mid-morning on March 3 as India issued a purchase tender seeking May-loading sweet and sour crude.

The May Exchange of Futures for Swap was valued at $2.42/b at 11am (0300GMT) in Singapore on March 3, dropping by 19 cents/b from the Asian close on March 2, S&P Global Platts data showed.

The Brent/Dubai EFS is a key indicator of the spread between light, sweet and heavy, sour crudes, and a narrower EFS makes crude priced against Dubai less economically attractive for Asian refiners compared to Brent-linked ones.

India's largest refiner, Indian Oil Corp., issued a purchase tender seeking May-loading barrels of US, West African and Middle East crude.

While trade activity for May-loading barrels is yet to commence in the run up to the OPEC+ meet and its outcome, market participants suggest India may once again opt for West African crude.

"They are probably looking at West African grades, and are hence not concerned with the OPEC+ meeting or OSP issuance," said a trader based in Singapore.

The glut of crude oil in West Africa due to a supply overhang from previous months continues to present itself as an optimal choice for IOC, traders say.

Additionally, the weaker demand outlook from China further adds to volumes of unsold West African crude barrels.

Meanwhile, among arbitrage barrels, US crudes continue to remain expensive as the region recovers from sub-zero conditions and production facilities limp back to normalcy.

"For US arbitrage to be workable into Asia, the WTI/Brent [spread] has to be wider by a dollar or two, or freight rates need to get cheaper," said another trader in Singapore.

At mid-morning in Singapore (0300 GMT), the May/June Dubai time spread was valued at 59 cents/b, lower by 4 cents/b from Asia close March 2, Platts data showed.

Meanwhile, the June/July Dubai time spread was valued at 57 cents/b, also lower by 4cents/b from the previous day assessment at Asia close.