Dubai futures market structure rangebound in contango

Singapore — The market structure for Dubai crude futures was rangebound in contango in mid-morning trade in Asia Aug. 11 as the market awaited the release of more monthly official selling prices from Middle Eastern producers following the lead of Saudi Aramco and ADNOC.

The September/October Dubai crude futures spread was pegged at a contango of 32 cents/b at 11 am Singapore time (0300 GMT) Aug. 11, stable from the Asia close on Aug. 7, S&P Global Platts data showed.

The October/November spread was pegged at a contango of 27 cents/b at 0300 GMT, widening 3 cents/b over the same period.

The market structure has steadied for the moment as the market awaits more drivers, after spreads eased late last week on news of Saudi Aramco lowering its official selling prices for September.

ADNOC also subsequently lowered its OSPs, setting its September OSP for Murban crude Aug. 10 at Platts Dubai plus 85 cents/b, down 90 cents from August, and the September OSP for medium crude grade Upper Zakum at a premium of 65 cents/b to Platts Dubai, down $1.30 from August.

Despite the reductions in OSPs, an uplift in the market structure was unlikely as demand recovery remains capped, market sources said. Spot market differentials were also expected to remain in discounts, they added.

"The [spot] market will still have to be in a discount, just not sure how deep it can go," a sour crude trader said Aug. 11.

The Dubai cash/futures (M1/M3) spread stood at a discount of 30 cents/b at the Asia close Aug. 7, Platts data showed. The spread narrowed the day after Saudi Aramco's OSP release, but is expected to remain discounted in the near term.