Dubai Futures: June Al-Shaheen cargoes fetch deep discounts amid muted Asian crude demand

Singapore — Trades for Qatari Al-Shaheen cargoes kicked off June spot trading of Middle East sour crude in Asia Thursday, but buying inquiries remained muted amid refinery run cuts and ample supply of unsold May cargoes, traders told S&P Global Platts.

Initial reports from market participants around midday Thursday showed that Al-Shaheen crude, which was offered by the state's marketing arm QPSPP, fetched deep discounts in the tender that closed recently. The cargoes were sold at discounts averaging around $10.50/b under Platts front-month Dubai crude assessments, traders said.

QPSPP had offered two 500,000-barrel clips of June-loading Al-Shaheen cargoes via the tender, which also had a cargo each of Qatar Land and Qatar Marine on sale. Further specifics on pricing and buyer details were still emerging Thursday afternoon. Details for the Qatar Land and Marine crude grades were also pending.

QPSPP set the monthly term price for its June Al-Shaheen crude at a discount of around $9.90/b to Dubai, according to a source familiar with the details.

Last month, QPSPP offered and sold five 500,000-barrel cargoes of its crude via a similar tender. Three of those were Al-Shaheen cargoes, sold at an average price of around minus $3.07/b to Platts front-month Dubai crude assessments. QPSPP's Qatar Land and Qatar Marine crude grades were reportedly sold at discounts of around $3.40/b to $3.60/b under Dubai.

DUBAI FUTURES CLIMB HIGHER

Meanwhile, activity in the paper market saw a slight uptick for Dubai crude futures in the first half of the day, with intermonth spreads also strengthening a tad.

The June Dubai futures contract was pegged at $31.28/b as of 11 am in Singapore (0300 GMT) on Thursday, up slightly from Wednesday's assessment at $30.47/b.

Contango in the Dubai futures intermonth spread for May/June also weakened slightly Thursday morning, with the spread pegged at minus $3.70/b at 11 am. It had been assessed at minus $3.92/b Wednesday at 4:30 pm in Singapore (0830 GMT).

Oil prices and spreads had dipped overnight after a report from the International Energy Agency forecast oil demand would decline by 29 million b/d year on year in April, levels last seen in 1995.

Middle East sour crude benchmark cash Dubai fell to its lowest price in over 18 years at Wednesday's close following the news. June cash Dubai was assessed at $19.64/b Wednesday at the end of the Platts Market on Close assessment process in Asia, touching lows last hit in 2002.

Platts' front month cash Dubai assessment was previously assessed lower on February 27, 2002, at $19.57/b.