Dubai Futures: Prices tick up amid spot tenders, May allocations

Singapore — Benchmark Dubai crude futures rose during mid-morning trade in Asia Friday amid a flurry of activity in the Middle East sour crude market, including several spot tenders and crude allocations, traders said.

June Dubai futures climbed 3.6% overnight on market optimism that the latest reductions in official selling prices would help spur demand for May and June-loading crude in the Middle East sour crude market. This in turn would quicken the pace of rebalancing, in addition to the existing OPEC+ production cuts, which are planned to go down by 9.7 million b/d over the two months.

At 11 am in Singapore (0300 GMT) Friday, June Dubai futures were pegged at $31.68/b, S&P Global Platts data showed. The contract was assessed at $30.57/b at the 0830 GMT Asian close on Thursday. The June Brent/Dubai Exchange of Futures for Swaps spread continued to sink however, with the spread pegged at minus $3.42/b at 11 am Friday. It had been assessed at minus $2.51/b at 4:30 pm in Singapore (0830 GMT) on Thursday.

Buyers and term customers of Saudi Arabian and Iraqi crude in Asia were in the last stages of finalizing crude allocations for May-loading cargoes by the end of the week, market participants said.

Initial market talk did not reveal any supply cuts doled out to Saudi Arabia's customers in China, Japan or other Asian refiners, something buyers had been wary of following OPEC+ plans to slice production to 9.7 million b/d over May and June. But allocations have yet to be confirmed for all buyers in the East, so market watchers were keeping an eye out for any possible notice of supply cuts to refiners till the end of the day, they told Platts.

TENDERS EMERGE FOR JUNE

Meanwhile, a flurry of tenders kept traders busy toward the latter half of the week, with June-loading cargoes on offer at deep discounts, they said.

Russian Surgut's offer for two 100,000 mt cargoes of June-loading ESPO Blend was concluded Thursday night, with initial reports indicating that the cargoes could have been sold at discounts of around $4.50/b to $5/b under Platts front-month Dubai crude assessments, on a FOB Kozmino basis.

If this is the case, it is markedly down from last month's ESPO tender levels, last sold at premiums of around 80 cents/b against Dubai.

But the discounts are in line with prices fetched for competing grades this month, especially in the Chinese spot market, traders said.

Prices for Brazilian Lula crude, and Russian Sokol and Sakhalin crudes have slid into similar discounts for cargoes being offered into China on a July arrival basis, they said.

MIDDLE EAST SPOT TRADING UPDATE

Several cargoes of Middle East sour crude also changed hands overnight, following results from a Qatari tender as well as official selling prices that were released after weeks of delays.

BP was reported to have sold a June-loading clip of Abu Dhabi's Murban crude to Chinese trader Unipec, at a discount of $2/b against the June Murban OSP, market sources told Platts. The discounted cargo price follows heavy cuts from ADNOC for its May OSPs for the Murban, Das, Umm Lulu and Upper Zakum grades.

Abu Dhabi cut the May Murban OSP to a discount of $6.95/b against Dubai, the company said this week.

However, weak refinery margins on lighter products yielded by Murban, such as naphtha, have pushed spot rates for the grade into deeper discounts even after factoring the latest OSP, traders said.