DUBAI FUTURES: August EFS soars above $4/b, hits 2-year high

Front-month Brent-Dubai Exchange of Futures for Swaps spread rallied mid-morning June 22, crossing the $4/b mark to hit a two-year high as the Middle East market remained strong though spot activity for the month continued to ease.

The front-month Brent-Dubai EFS was pegged at $4.09/b at 11 am (0300 GMT) in Singapore on June 22, the highest since May 30, 2019, when it was assessed at a premium of $4.52/b, S&P Global Platts data showed.

The Brent-Dubai EFS is a key indicator of the spread between light, sweet and heavy, sour crudes, and a wider EFS makes crude priced against Dubai more economically attractive for Asian refiners compared to Brent-linked ones.

Bullish sentiments remain steadfast prompted by a global demand recovery holding off arbitrage barrels from flowing to Asia and further boosting the Middle East crude market.

Despite pandemic concerns, Asian demand continues to remain steady with key oil importing countries such as India recovering well from the second wave of the virus.

However, the sour complex is expected to ease as spot activity for August-loading crude slows and cash premiums cool off after last week's strong trade activity.

Taiwan's CPC was heard to have bought, via tender, a 500,000 barrel cargo of August-loading Upper Zakum crude at a premium of around $1.90/b to Platts front-month Dubai crude assessments.

Similarly, Thailand's IRPC was heard to have bought, via tender, a 500,000 barrel cargo each of August-loading Qatar Marine crude and Banoco Arab Medium crude. Both cargoes were heard to have been bought at premiums of around 7-9 cents/b to the respective grade's official selling price. However, the information could not be immediately confirmed.

At mid-morning in Singapore, the August/September Dubai time spread was pegged at 82 cents/b, 7 cents/b wider from close on June 21, the data showed.

Meanwhile, the September/October Dubai time spread was pegged at 70 cents/b, up 6 cents/b from the previous day.