CRUDE MOC: Middle East crude differentials hit fresh lows after OSP cuts

Singapore — Spreads for a range of Middle East crude grades sank to fresh record lows at the end of the Platts Market on Close assessment process in Asia Thursday, with the trading outlook for the June cycle looking bearish despite producers slashing official selling prices.

June cash Murban's spread against June Dubai futures was assessed at minus $10.13/b at 4:30 pm in Singapore (0830 GMT) Thursday, the lowest assessment since Platts began publishing it in July 2018.

Murban, a key light sour grade for the Asian spot market, flipped to a discount against Dubai paper for the first time ever on March 9 as product margins for light-ends sank with the emergence and spread of the coronavirus across Asia.

Since then, the grade has maintained its discount to Dubai futures. The spread averaged minus $1.74/b over March, for May-loading Murban assessed by Platts. But with oil demand predicted by the International Energy Agency to fall 29 million b/d on the year in April, crack spreads for products from the light sour crude, such as naphtha, gasoline and jet fuel, are set to slide further. As a result, the crude's spread against Dubai futures has plummeted this month, averaging minus $8.87/b so far in April.

Spot market demand for other Middle East crude grades has not fared much better this week. Qatari medium-heavy Al-Shaheen crude fetched discounts of around $10.40/b against Platts front-month Dubai crude assessments in a spot market tender that concluded late Wednesday, according to market participants.

The grade was assessed at a discount of $10.88/b against June Dubai futures Thursday, also marking the lowest on record.

In Thursday's MOC a total of 14 partials changed hands for Dubai and Oman, bringing the total count for the month so far to 64. Of these, 48 are Dubai and 16 are Oman partials for June.

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.

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 Oman, or, with a quality premium, a Murban cargo to the buyer.