Dubai crude futures lag uptick in global oil prices

Singapore — Benchmark Dubai crude futures edged slightly higher in mid-morning trade in Asia Thursday, with the uptick limited by the growing number of refinery run cuts and increasing supply of Middle East sour crude in Asia, market participants said.

At 11 am Singapore time (0300 GMT), the front-month June Dubai futures contract was pegged at $29.88/b, up 72 cents/b from its assessment at $29.16/b at 4:30 pm (0830 GMT) Wednesday.

However, Dubai's premium to ICE Brent futures narrowed as the latter rose almost 5% to $26.13/b over the same period.

The June Brent/Dubai Exchange Futures for Swaps spread was pegged at minus $3.75/b at 0300 GMT Thursday, up from minus $4.28/b at 0830 GMT Wednesday.

Dubai's gains were limited by a growing number of refineries cutting run rates in Asia, market participants said. They were also nervously monitoring the swell in the volume of crude oil being exported by OPEC kingpin Saudi Arabia.

Thailand's Sriracha refinery said it had cut operating rates by about 20% in response to falling demand for refined oil products, market sources told S&P Global Platts.

The refinery - which makes up about 21% of Thailand's refining capacity and can meet 35% of the country's petroleum products requirements - joins a growing list of companies in Asia that are reducing throughput despite cheap prices for Middle East sour crude.

Several Indian refiners are considering run cuts, with Bharat Oman's Bina refinery likely to reach a decision this week, according to a company-linked source.

Falling appetite for sour crude in Asia led the June Dubai cash/futures spread - a key gauge of spot market demand - to its lowest on record at Wednesday's 0830 GMT close in Asia at a discount of $7.96/b, as traders mulled the severe imbalance in Asia crude markets come June. Demand for summer-heavy products such as gasoline and diesel has been nearly wiped out in Asia amid lockdowns related to the coronavirus and the situation is being exacerbated by unsold cargoes of Middle East sour crude from April and May trading cycles, market participants said. The situation was expected to worsen in coming weeks, they said.

Released from its OPEC obligations to rein in production, Saudi state-run oil giant Aramco late Wednesday isaid t was filling 15 tankers with more than 18.8 million barrels of crude - its most ever in one day - as it ratchets up its price war with Russia.

Many of the tankers that have loaded from Saudi Arabia in recent days have no listed destination or have indicated they are awaiting orders, which could mean their cargoes are unsold, though this information often is not immediately updated on ship tracking services.