Crude MOC: April overhang weighs on Dubai, Oman cash spreads

Singapore — May cash Oman's spread to May Dubai futures flipped into contango Thursday for the first time this month, mirroring cash Dubai, with unsold supply from the April cycle weighing on the May spot market this month.

Cash Oman was assessed at a discount of 16 cents/b to May Dubai futures at the end of the Platts Market on Close assessment process Thursday, flipping from a backwardation of 3 cents/b assessed at Wednesday's close.

Despite talks of an extension for OPEC+ supply cuts in the wider market, Middle East sour crude traders pointed to leftover cargoes from the previous cycle adding further downside pressure to an already demand-light month for May.

Spot trading for May cargoes is yet to kick off in the Middle East sour crude market, as traders and refiners based in Asia seek cues from the OPEC+ meeting as well as from official selling prices yet to be issued by producers for this month.

But as evidenced in the previous trading cycle for April, a contango market may see buyers wait out for as long as possible before securing May cargoes this month, traders told S&P Global Platts this week.

The contango in Dubai deepened Thursday as well, with May cash Dubai's discount to futures assessed at minus 30 cents/b at the 0830 GMT close for trading in Asia. The spread was assessed at minus 27 cents/b on Wednesday.

At the same time however, Dubai futures' discount to ICE Brent narrowed to its lowest point in 11 months, with global oil markets anticipating the brunt of any OPEC+ supply cuts to impact Middle East sour crude rather than Brent-linked barrels of oil.

The May Brent/Dubai EFS clocked in at 32 cents/b at 4:30 pm in Singapore (0830 GMT), down from 60 cents/b assessed Wednesday.

Meanwhile, Thursday's Market on Close assessment process for Middle East sour crude saw two May Dubai partials traded between seller Shell and buyer Vitol, both at an outright price of $50.80/b. This brings the total count for partials this week to 15, 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.