CRUDE MOC: Buying interest for Upper Zakum amid OPEC+ output cuts

Singapore — Demand for Asian medium sour staple crude Upper Zakum surfaced in the spot market Wednesday as well as in the Platts Market on Close assessment process, with production cuts from UAE driving buyers to the spot market, traders said.

In the Platts MOC for crude cargoes, France's Total bid for a 500,000 barrel clip of the grade over a stipulated July loading period.

Total's bid, initially at parity with the July official selling price for Upper Zakum, rose to a premium of 45 cents/b by the end of the MOC at 4:30 pm in Singapore (0830 GMT), without any sellers in sight.

Earlier in the day, traders said a similar July-loading cargo of the grade had changed hands in the spot market at a premium in the 30s cents/b range to the Upper Zakum OSP.

Total's bid for Upper Zakum was the first order placed in a new eWindow platform for full cargoes of crude oil that was initiated earlier this month.

The platform has been introduced following an uptick in liquidity of bids, offers and trades for full crude cargoes in the Platts crude MOC process in Asia, with a total of 24 trades reported in the first quarter of 2020, after 29 cargo trades reported in all of 2019.

The migration does not apply to the MOC process for Middle East crude partials that is used to assess benchmark Platts Dubai and Oman crude oil prices.

Meanwhile, crude traders in Asia said OPEC+ production cuts from Middle East suppliers were proving supportive in parts of Asia, with the outlook for medium and heavy sour crudes strong as sellers rein in exports over May, June and July.

The cutback will help ease some of the excess in the Asian spot market in recent months, with a large chunk of previous-month cargoes headed into storage.

However, in recent days, several producers, including Saudi Arabia, Kuwait and the UAE have reaffirmed their efforts to whittle down excess production to rebalance market supply.

Earlier this week, the UAE said it planned to cut production by an extra 100,000 b/d in June, on top of its OPEC+ commitments, to support Saudi Arabia's efforts to balance the market..

Saudi Arabia first announced Monday it would cut an extra 1 million b/d in June while Kuwait will trim its production by a further 80,000 b/d, on top of OPEC+ commitments.

Additionally, the UAE's largest producer, Abu Dhabi National Oil Co. will cut volumes of its flagship Murban and Upper Zakum grades by 20% in June, compared with 15% cuts for May volumes, the company has said.