CRUDE MOC: Middle East spreads in mild recovery after touching record lows

Singapore — Brief spikes of buying interest in the Middle East sour crude market Tuesday lent a mild degree of support to price differentials for several grades, while others continued on a downward trajectory in an oversupplied, low-demand cycle for May cargoes.

Trading house Gunvor picked up a cargo of May-loading Upper Zakum from seller ExxonMobil via the Platts Market on Close assessment process Tuesday, the first MOC cargo trade for the medium sour crude this month.

Deals for the grade have been absent from the spot market as well this month, crude traders told S&P Global Platts this week. Upper Zakum is typically one of the most fungible crude grades traded in the spot market in Asia every cycle.

ExxonMobil, which has offered several cargoes of the medium sour crude via the Platts MOC this month, put two cargoes on offer Tuesday. One was priced against the Upper Zakum OSP, and the other against Platts front-month Dubai crude assessments.

Its offer against Dubai was picked up by Gunvor in the final minute before the end of the MOC, at a discount of $4.70/b to Dubai. ExxonMobil re-offered a second cargo at the same price after the close, but did not see additional buying interest.

The seller's second offer, priced against the OSP, stood at a discount of $1.65/b against the Upper Zakum OSP without trading Tuesday.

Abu Dhabi National Oil Company, which issues the official selling price for the grade, as well as three others, in March set its April official selling price for medium, sour Upper Zakum crude at 30 cents/b discount to light, sour Murban -- the lowest at least since 1993.

The previous low between the two grades OSP at 33 cents came at the height of global financial crisis in late 2008. Saudi Arabia has set the same price of its Arab Extra Light and Arab Light cargoes for March- and April-loading cycles

Tuesday's MOC also saw an offer for a May-loading Das Blend cargo placed by Total, which offered the 500,000 barrel clip down to a discount of $2.69/b to the Das OSP. However, Total withdrew the offer before the end of the MOC, in the absence of buying interest.

Platts assessed the OSP differential for Das Blend at minus $2.70/b Tuesday, its lowest on record yet. Valuations for the grade have suffered in the spot market this month alongside weaker product margins for lighter oil products, which the crude is rich in.

The May Dubai cash/futures spread was assessed at minus $5.08/b on Tuesday, up from minus $5.18/b assessed the day before.