CRUDE MOC: Bearish sentiment pulls Dubai structure to one-month low

Singapore — The cash/futures structure for benchmark Dubai crude weakened to a one-month low July 17 on bearish market sentiment, trade sources said.

The Dubai crude cash/futures (M1/M3) spread was assessed at a premium of 67 cents/b at the 4:30 pm (0830 GMT) Singapore close on July 17, narrowing 7 cents/b on the day, S&P Global Platts data showed. The spread was last narrower at 62 cents on June 12, 2020, the data showed.

The spread held largely steady for the first half of July, before crunching since the middle of the month.

Weak refining margins remained a dampener on the market outlook, while supply is also expected to increase after OPEC+ members decided to pare back their production cut commitment.

During the Platts Market on Close assessment process on July 17, a total of three 25,000-barrel partials traded, consisting of a single September Dubai partials and two September Oman partials.

The trades on July 17 brought the total partials trades in July so far to 40, consisting of 33 Dubai partials and 7 Oman partials. No convergences have been declared as yet.

Outside of the MOC process, recent tender closures this week showed that market differentials have trended lower on the month, especially for grades like ESPO crude, which are typically popular with Chinese refineries.

September-loading ESPO cargoes were sold at premiums of $1.30-$1.60/b against Platts front-month Dubai crude assessments, FOB basis, according to sources.

The traded levels were substantially lower on the month, when August-loading cargoes were last heard to be sold at premiums in the high $3/b levels.

Poor domestic margins and port congestions in China, brought about by a surge in purchases the previous months when oil prices were lower, have limit buying appetite from buyers in China, traders said.