Crude MOC: Cash Dubai slips; Asia tender purchasing continues

New York — Benchmark cash Dubai's premium against Dubai futures dipped at the Asian close March 15 despite continued Asian tender purchases as concerns on demand for medium and heavy grades weighed on sentiment.

S&P Global Platts assessed May cash Dubai at a premium of $1.38/b to the same-month Dubai futures at the 4:30 pm Singapore close on March 15, down 12.5 cents/b from the close on March 12.

May cash Oman also eased to a premium of $1.39/b to same-month Dubai futures, down 15 cents/b from the close March 12.

While purchase tenders from Asian buyers like Thailand's IRPC and Taiwan's CPC showed healthy demand for Middle East crude, preference for lighter grades over medium and heavy grades remain a worry for producers.

IRPC issued a tender seeking 500,000-1 million barrels of various crude grades for May loading or June delivery. The tender closes March 16 with next-day validity.

Taiwan's CPC also issued a tender seeking 1 million-2 million barrels of various crude grades for May loading or June delivery. The tender closes March 16 with validity until March 18.

Demand for lighter grades continues to remain healthy but medium and heavy sour crude grades could see weak buying appetite on the spot market, traders said.

"It's hard to say [why structure is coming off]. Medium sour [demand] is not good compared to lighter grades like Murban and Das," said a trader with a north Asian refinery.

Spot differentials for medium and heavy grades could remain at parity or drop to discounts compared with lighter grades, which could trade at healthy premiums, said a crude oil trader.

The Platts Market on Close assessment process on March 15 saw a total seven May Dubai partials of 25,000 barrels traded.

The partials were traded with Shell, Vitol, Unipec and Reliance on the sell side and Lukoil, Gunvor, Koch and PetroChina on the buy side.

No convergence has been declared in the month so far. A convergence occurs when 20 partials are traded between two counterparties, resulting in a full, 500,000 barrel physical cargo declared from the seller to the buyer.