Dubai futures steady as more spot activity emerges in sour crude market

Singapore — Dubai crude futures timespreads were steady to slightly higher Aug. 18 as trading momentum gathered pace, with the results of more fresh deals emerging in the sour crude market this week.

At 12 pm Singapore time (0400 GMT), the September/October Dubai crude futures spread was pegged at a contango of 63 cents/b , narrowing 4 cents/b from the Asia close the day before, S&P Global Platts data showed.

The October/November spread was pegged at a contango of 46 cents/b, narrowing 3 cents/b over the same period.

Intermonth spreads were moving in a steady range as more tenders and spot trading activity emerged this week. However, the market remains stuck in contango as sentiment still leans toward the bearish side against a backdrop of tepid uptake, trade sources said.

"There is also pressure coming from arbitrage US crude cargoes," a sour crude trader based in Northeast Asia said, in reference to buying interest from China in recent weeks.

State-owned Chinese oil refiners have returned to buying US crude oil for September loading and the expected volume should exceed the last peak buying spree seen in May, according to traders.

At least seven China-bound cargoes, carrying some 14 million barrels of crude, have been scheduled for September loading in the US Gulf Coast in recent days, according to S&P Global Platts fixtures data.

More is likely on the way, with a maximum of 10 VLCCs, or 20 million barrels of crude, that can be sent, Platts reported earlier.

Lower freight costs may have encouraged the buying: Inquiries in the global VLCC market have been limited in recent weeks, putting downward pressure on rates.