Dubai Futures: Intermonth spreads narrow as sentiment softens

Singapore — Dubai crude futures intermonth spreads narrowed by midday June 23, reflecting weakening sentiment in the Middle East sour crude market as physical cargoes traded at lower cash differentials than earlier in the month.

The prompt July/August Dubai crude futures spread was pegged at 18 cents/b in backwardation at 12 pm (0400 GMT) in Singapore on June 23, narrowing marginally from 19 cents/b assessed at the 4:30 pm (0830 GMT) close in Singapore on June 22, S&P Global Platts data showed.

The August/September spread was also pegged lower, at parity, at 12 pm on June 23, down from plus 5 cents/b assessed at the Asian close on June 22.

The August/September spread had only recently flipped into backwardation on June 19, on the back of expectations of lower OPEC+ crude oil production following the submission of compensation plans by Iraq and Kazakhstan.

Sentiment softened in the Middle East sour crude market following a downtrend seen for cash differentials of crude cargoes from the region.

Market participants said July-loading Basrah Heavy cargoes were reported to have changed hands at premiums around the mid-$1s/b to low $2s/b against the grade's official selling price, lower than the mid-$3s/b premium last week.

In addition, offer levels for Murban crude have come off from OSP premiums earlier this month, with a cargo of August-loading Murban crude seen traded at a discount of 70 cents/b to Murban's OSP in August in the Platts Market on Close assessment process on June 22.

Weak refining margins for lighter crude grades coupled with high OSPs as well as availability of Murban crude on floating tankers have dampened sentiment for the light sour crude grade.

Meanwhile, the August Brent/Dubai Exchange of Futures for Swaps spread was pegged at 95 cents/b at 12 pm on June 23, slightly higher than the 93/b assessed at the Asian close on June 22.

August Dubai futures was higher at $41.98/b at 12 pm on June 23, up 1.7% from the Asian close on June 22.