CRUDE MOC: Cash Dubai widens discount against Dubai futures

Singapore — Benchmark cash Dubai continued to widen its discount against Dubai futures at the Asian close on Sept. 3 as weak product margins weighed on market sentiment.

November cash Dubai was assessed at 40.5 cents/b discount against same-month Dubai futures, wider than the 37 cents/b discount at the 4:30 pm (0830 GMT) Singapore close on Sept. 2.

The spread, also known as the Dubai M1/M3 spread, is a key indicator of spot market sentiment for sour crude in Asia and tracked by Middle East producers to gauge the extent of price adjustments to their official selling prices.

November cash Oman, meanwhile, was steady day on day at minus 27 cents/b against same-month Dubai futures on Sept. 3, Platts data showed.

Weakening product margins could cap appetite from Middle East crudes' biggest buyers in Asia at a time when supplies could tighten, traders said.

Narrowing refining margins amid high product inventory have caused China's domestic refineries to cut runs in August although total crude throughput remained relatively high at 82.8% for state-owned oil companies, data collected by S&P Global Platts showed Aug. 27.

Second-month gasoil swap crack to Dubai swap was assessed at a three-month low of $3.94/b on Sept. 3, and has averaged at $4.36/b so far in September -- the lowest since July 2003 when it averaged at $4.08/b, Platts data showed.

Independent refineries' average refining margins have also fallen to breakeven levels while eroding availability of crude import quotas has capped their import interest, information collected by Platts showed Sept. 3.

Meanwhile, the Platts Market on Close assessment process on Sept. 3 saw a single trade for November Dubai partials, with PetroChina lifting an offer from oil major Shell. This brings the total number of partials traded in September so far to six, all of which consist of November Dubai partials.

Each partial is 25,000 barrels in size. A convergence occurs when 20 partials are traded between two counterparties, resulting in a full 500,000 barrel physical cargo being declared from the seller to the buyer.

For Dubai partials, the seller has the option to deliver a Dubai, Oman, Upper Zakum, Al-Shaheen or, with a quality premium, Murban cargo to the buyer.