Dubai futures structure stable to weaker as market awaits OPEC+ meeting

Singapore — The market structure for Dubai crude futures was stable to weaker in mid-morning trade July 14 as participants looked towards the OPEC+ meeting on July 15 for further supply cues.

At 11 am Singapore time (0300 GMT), the August/September Dubai futures intermonth spread was pegged at 25 cents/b backwardation, stable from the Asian close the day before. The September/October spread was pegged at 6 cents/b backwardation, inching down 1 cent/b over the same period, S&P Global Platts data showed.

The September Brent/Dubai Exchange of Futures for Swaps was pegged at 54 cents/b, down 4 cents/b from the Asian close July 13, the data showed.

The OPEC+ Joint Ministerial Monitoring Committee's meeting on July 15 will determine whether the coalition will taper production cuts agreed earlier. OPEC+ agreed in April to cut output by a record 9.7 million b/d effective May 1, which is slated to ease to 7.7 million b/d in August unless the current level is extended beyond July.

Aside from this uncertainty, outright crude futures prices retreated in mid-morning trade in Asia amid a renewed rise in coronavirus cases in several countries.

Tracking the downtrend in Brent futures, the September Dubai swap was pegged at $41.32/b at 0300 GMT July 14, down 89 cents/b from the July 13 close.

"Overall oil demand has taken a hit this year and we don't expect any significant recovery going into this [second] half of the year," a Northeast Asian crude oil trader said. "Buying interest will at most be stable or even lower following the OSP increases," the trader added.

Recent official selling price hikes came against a backdrop of suppressed refinery magins, with market sources saying it would be difficult to spur uptake given the current market conditions.