OPEC+ compliance efforts push Dubai spreads further into backwardation

New York — Front-month Dubai intermonth spreads moved further into backwardation in mid-morning trade in Asia June 19 after the OPEC+ alliance increased pressure on members to comply with production cuts, giving violators until June 22 to detail their reduction plans.

The July/August Dubai crude futures spread was pegged at 26 cents/b in backwardation at 11 am in Singapore June 19 (0300 GMT), a month-to-date high and up 8 cents/b from the assessment at 18 cents/b in backwardation at the Asian market close the day before, S&P Global Platts data showed.

The August/September spread flipped to backwardation for the first time in June to be pegged at 4 cents/b at 0300 GMT, up from the assessment at minus 11 cents/b at the 4.30 pm Singapore time close (0830 GMT) on June 18.

The intermonth spreads rose following reports that Iraq and Kazakhstan have submitted plans to the OPEC+ alliance on how they will implement deeper oil production cuts in coming months, following through on pledges to make good on violating their quotas in May.

Other over-producing countries such as Nigeria and Angola, which have yet to declare their plans, have until June 22 to submit their supply cut schedules, the OPEC+ Joint Ministerial Monitoring Committee announced following a meeting on June 18.

Earlier this month, the OPEC+ alliance agreed to a one-month extension of the deeper production cut of 9.6 million b/d to July, following commitments from Iraq, Nigeria, Angola and Kazakhstan to compensate after failing to fully comply with the cuts. The deal calls for the compensatory cuts to be made over July-September.

August Dubai futures were also seen higher in mid-morning trade June 19 at $40.95/b at 0300 GMT, up 3% from the previous close. The August Brent/Dubai Exchange Futures for Swaps was pegged at $1/b at 0300 GMT, edging down from the assessment at $1.03/b at the Asian close on June 18.

In spot trading activity in the Middle East crude market June 19, medium, heavy sour crude cargoes were heard changing hands at steady to stronger premiums.

Reflecting bullish sentiment for medium, heavy sour crude, the Dubai crude cash/futures (M1/M3) spread -- a key indicator of spot market sentiment for sour crude in Asia -- was assessed at a premium of $1.31/b at the 4:30 pm Singapore close on June 18, up 29 cents/b day on day and the highest since January 31, when it was assessed at $1.92/b, Platts data showed.