Intermonth spreads for Dubai crude futures weaken on demand worries

Singapore — The intermonth spreads for Dubai crude futures weakened into a wider contango in Asia mid-morning trade July 28, as demand recovery concerns continued to weigh on the market.

At 11am Singapore time (0300 GMT), the August/September Dubai futures intermonth spread was pegged at a contango of minus 34 cents/b, widening 9 cents/b from the Asian close on July 27, S&P Global Platts data showed.

Meanwhile, the September/October spread was pegged at a contango of 30 cents/b, widening 5 cents/b from the previous close.

"Spot demand is still very frail and margins are not rebounding much, still more or less rangebound," a Middle Eastern crude oil trader said.

The Dubai cash structure also weakened further in recent days. The Dubai cash/futures (M1/M3) spread was assessed at a two-month low of 8 cents/b on July 27, down 15 cents/b on the day, Platts data showed.

"Structure is coming off quite a lot over the last couple of weeks... expecting the next round of official selling prices to go down," another sour crude trader said.

Prices of sour crude grades have trended lower this month, with differentials for grades like Murban and Basrah Light falling to three-month lows in recent days, the data showed.

A hike in OSPs earlier this month had dampened buying interest, according to sources.

Meanwhile, the September Brent/Dubai Exchange of Futures for Swaps was pegged at 16 cents/b at 0300 GMT on July 28, narrowing 2 cents/b from the Asia close on July 27.