CRUDE MOC: Middle East crude market braces for bearish month ahead

Singapore — Structure for Middle East sour crude, as evidenced by the Dubai cash/futures spread, dove back into a firm contango Wednesday at the end of the Platts Market on Close assessment process, with low demand overshadowing the prospect of supply cuts.

The May Dubai cash/futures spread fell to minus 27 cents/b at 4:30 pm in Singapore (0830 GMT), down from minus 4 cents/b on Tuesday.

May cash Oman's premium to May Dubai futures also dipped, falling 12 cents/b day on day to be assessed at 3 cents/b at the close on Wednesday.

Spot market trading has yet to begin for May-loading cargoes of Middle East sour crude in Asia, but market participants seemed to err on the side of caution.

Revised downward estimates for oil demand from Platts Analytics and other sources overshadowed OPEC+ efforts to reach an agreement for furthering production cuts in Vienna this week.

Trading is expected to kick off once official selling prices are announced by producers such as Saudi Aramco, UAE's ADNOC and Kuwait Petroleum in the coming days.

However, traders and refiners in Asia believe the direction for price setting this month will hinge on the extent of supply cuts emerging from the OPEC Secretariat in Vienna Thursday and Friday.

Wednesday's Market on Close assessment process for Middle East sour crude saw a single May Dubai partial traded before close, with Shell selling to Total at an outright price of $50.85/b. This brings the total count for partials this week to 13, all of them for Dubai.

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.