Crude MOC: Middle East structure down 22 cents/b from Feb average

Singapore — Market structure for Middle East sour crude averaged 22 cents/b lower in the first week of March compared to the whole-month average for February, setting the stage for further declines in spot market prices for May-loading barrels that are yet to start trading.

The May Dubai cash/futures spread – also known as the Dubai M1/M3 structure and tracked as an indicator of market sentiment for Middle East crude – sank to minus 46 cents/b at the end of the Platts Market on Close assessment process Friday.

This brought the week's average to minus 24 cents/b, compared to the February average of minus 2 cents/b.

The spread was assessed at minus 30 cents/b on Thursday at the 4:30 pm close in Singapore (0830 GMT).

The Middle East market had begun the week with all eyes focused on OPEC+ meetings held in Vienna over March 5-6, hoping the producer alliance would reinvigorate sinking global oil demand with a fresh round of supply cuts.

But OPEC ministers that met Thursday threw oil markets a curveball when they suggested additional 1.5 million b/d supply cuts, contingent on the non-OPEC part of the coalition agreeing to take on 500,000 b/d of that reduction.

Russia, a long-time OPEC-ally in production cut agreements dating back to 2016, has so far refused to endorse any plan that would further reduce output beyond the current 1.7 million b/d cut under the current plan, which expires at the end of this month.

Intermonth spreads along the Dubai futures curve sank back into contango in the latter half of the week, with sentiment gloomy despite the probability of some measure of production cuts from the alliance.

Meanwhile, Friday's Market on Close assessment process for Middle East sour crude saw a total six May partials traded, four of these being Dubai partials and two Oman. The Oman partials were offered in the MOC by Unipec and were picked up by Shell toward the close, each at $48.85/b.

The Dubai partials were also sold by Unipec to buyers Total and Vitol at an outright price of $48.55/b each. This brings the total count for partials this week to 21, comprising 19 Dubai and two Oman.

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.