Middle East complex mixed on market uncertainty

Singapore — Sour crude spreads, led by Dubai futures painted a mixed picture Wednesday morning in Asian trading hours, as market participants mulled over uncertainty regarding supply cuts amid collapsing global oil demand.

Dubai futures' discount to ICE Brent narrowed mid-morning in Asia, but intermonth spreads for the sour crude reference marker softened, with Dubai-linked crude markets hesitant to price in any bullish impact from potential OPEC+ production cuts yet.

May Brent/Dubai Exchange Futures for Swaps narrowed to 61 cents/b at 11 am in Singapore (0300 GMT), slimming from the 92 cents/b assessed at Tuesday's close of 4:30 pm (0830 GMT).

A narrower EFS implies strength in the Middle East sour crude complex relative to Brent.

But at the same time, intermonth Dubai structure did not shift at the front of the curve, and actually softened further out as traders consider the possibility of a less-than-satisfactory supply cut agreement.

The prompt April/May Dubai intermonth spread was pegged at 8 cents/b at 11 am in Singapore Wednesday morning, unchanged from the assessed level at Tuesday's close.

Further out, the May/June Dubai futures spread softened to be pegged at 9 cents/b Wednesday, dipping from its assessment of 13 cents/b Tuesday at the close in Asia.

The Middle East crude market is also watching out for official selling prices, or OSPs, from many of the Vienna attendees in the coming days, but these are likely to be issued after the OPEC+ meeting, several traders told S&P Global Platts.

Together, the supply cut agreement and OSPs will form the foundation of how the spot market in Asia performs this month, when cargoes scheduled to load from the Persian Gulf in May will trade.

Any production cut agreement from OPEC and its allies convening in Vienna on March 5 is likely to see an amplified response in the Dubai complex, as a large chunk of Middle East crude is priced off the benchmark in Asia.