Dubai crude complex mixed as Asia market mulls ADNOC cuts

Singapore — Benchmark Dubai crude futures traced an overnight plunge in global crude oil prices, but the slide was contained as Abu Dhabi National Oil Company notified its customers of cuts to their May crude volumes, lending some measure of rebalancing to an oversupplied market.

At 11 am in Singapore (0300 GMT), the June Dubai futures contract was pegged at $23.65/b, down 12.9% from its assessement at $27.15/b at Tuesday's close in Asia.

The outright price followed overnight falls in June ICE Brent and NYMEX WTI crude futures, which settled below $20/b and around $10/b, respectively.

The Dubai complex saw a relatively slower rate of decline however as crude traders in Asia contended with market factors that could help rebalance some of the vast oversupply in the market.

Dubai's premium over Brent futures widened as a result, with the June Brent/Dubai Exchange Futures for Swaps spread being pegged at minus $5/b at 11 am Wednesday morning in Asia. The spread was assessed at minus $4.78/b at Tuesday's Asian close at 0830 GMT.

ADNOC has announced it will cut contractually termed volumes of its Murban and Upper Zakum grades by 15% for May, and cut Das Blend and Umm Lulu volumes by 5%.

Market participants had expected some form of reduction in ADNOC volumes from the 4.1 million b/d rate the emirate is currently producing at. Crude traders said the cuts may help ease some of the excess supply in the coming months, but there were still plenty of barrels floating in the spot market.

Intermonth spreads for Dubai futures posted mixed results Wednesday morning, with the May/June spread largely steady overnight, while the June/July spread edged higher.

The May/June spread was pegged at minus $4.09/b at 0300 GMT Wednesday, the same as its assessment at 0830 GMT Tuesday.

The June/July spread rose Wednesday morning to be pegged at minus $1.85/b after being assessed at minus $2.16/b Tuesday.

However, traders pointed out the spreads remained in deep contango. While the complex did not decline as much as oil prices in other regions, the market was not in recovery mode yet, they said.