CRUDE MOC: Platts May cash Dubai crude closes at $23.40/b, averages $33.70/b in Mar

Singapore — The S&P Global Platts cash assessment for May-loading Dubai crude oil cargoes settled at $23.40/b Tuesday and averaged $33.70/b over March.

The May cash assessment for Oman crude settled at $23.40/b Tuesday, taking the average for March to $34.01/b.

The average for front-month cash Dubai in March is 37.8% lower than in February, when the contract averaged $54.22/b.

Similarly, the front-month Oman cash contract averaged $54.51/b over February, or 37.6% higher than in March.

The declines track heavy corrections in global oil prices over the month of March, with the front-month ICE Brent futures contract down nearly 40% for the month. The May ICE Brent futures contract was assessed at $23.23/b at 4:30 pm in Singapore (0830 GMT) at the close of the month, averaging $34.62/b for March. Comparatively, the contract averaged $55.60/b at the 0830 GMT Asian close over February.

Meanwhile, May cash Dubai's discount to the Oman assessment averaged 31 cents/b in March, widening from 28.9 cents/b in February, Platts data showed.

March MOC recap

Tuesday's Platts Market on Close assessment process for Middle East sour crude saw a total of 137 partials change hands, with four convergences. Of these, 108 were Dubai and 29 were Oman partials. Three convergences were seen for Dubai partials trades, and one for Oman.

Four Murban cargoes were declared on the convergences, two by Shell and one by Unipec to Petrochina on convergences of Dubai partials, and one by Unipec to Petrochina on a convergence of Oman partials.

A total 292 partials -- 7.3 million barrels of crude -- were traded in the Platts MOC over March, of which 252 were for Dubai and 40 for Oman. Of these, eight convergences were seen, comprising one Dubai cargo, one Al-Shaheen cargo and six Murban cargoes.

Additionally, nine full sized cargoes of 500,000 barrels each were traded from bids and offers shown in the MOC process in March. Four of these were Murban, four were Upper Zakum and one of these was a May loading cargo of Das Blend crude.

All Upper Zakum cargo trades were a result of offers from ExxonMobil, which were subsequently bought by Glencore and Shell.

Full sized cargoes are typically 500,000 barrels per bid, offer and trade, whereas partials are sized in clips of 25,000 barrels each.

Under the partials trading mechanism, the seller declares a full 500,000 barrel cargo to the buyer after 20 partials have been traded for the same loading month between the two companies.

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.

For Oman partials, the seller has the option to deliver an Oman cargo, or a Murban cargo with a quality premium, to the buyer.

Changes to quality premium

The Quality Premium for May-loading Murban crude oil is $0.8745/b, and will be effective for trade in May-loading cargoes during the MOC through March.

From April 1, Platts will raise the minimum threshold to 50 cents/b from 25 cents/b for the Murban quality premium that sellers receive for the nomination and delivery of a cargo of Murban crude oil into a physical convergence of Dubai, Al Shaheen, Upper Zakum or Oman partials during the MOC.

The Murban quality premium is set at 60% of the net price difference between Platts front-month cash Murban assessment and Platts front-month cash Oman assessment during the full month prior to announcement.

The higher minimum threshold will mean that a QP of $0.00/b will be announced if 60% of the observed price difference between the Platts Murban and Oman assessments during the prior month is less than 50 cents/b.

The change follows an unprecedented narrowing of the relative value of Murban compared with other grades in the Oman and Dubai baskets.

Platts announces the Murban QP on the first publishing day of each month, two months prior to the QP coming into effect. As an example, Platts would announce Murban QP on the first business day of April, for cargoes loading in June. This calendar aligns with typical trading practices, where June cargoes are primarily traded in the month of April.