Dubai futures prompt-month EFS flips to negative on sweet crude surplus

Singapore — The prompt-month Brent/Dubai Exchange of Futures for Swaps remained in negative territory in mid-morning trade in Asia Sept. 15 after flipping from positive the day before for the first time in 15 weeks, S&P Global Platts data showed.

The November EFS was assessed at minus 2 cents/b at the Asia close Sept. 14, and was pegged at a wider discount of minus 10 cents/b at 0300 GMT Sept. 15. The prompt-month EFS was last in negative territory on May 29 at minus 80 cents/b, Platts data showed.

The flip back to negative comes against a backdrop of sweet crude oversupply, trade sources said. The Brent/Dubai EFS is an indicator of the premium of light sweet Brent relative to the values of Dubai-related Middle East grades.

"The world has had an excess of sweet crude in the last few years, mainly due to the US shale oil production... there is a much bigger imbalance now between sweet and sour crude supply," a crude oil trader said.

Another trader said: "CPC Blend exports set to rise in October and the light grade demand in Europe is worse."

A narrower EFS implies that the premium of low sulfur crude over high sulfur crude has eroded.

Meanwhile, the intermonth spreads for Dubai crude futures have also widened slightly following recent volume allocations from Saudi Aramco. Most Asian refiners have seen full allocations with no cuts for October, trade sources said.

At 0300 GMT, the October/November spread for Dubai crude futures was pegged at a contango of 46 cents/b, down 1 cent/b from the Asian close on Sept. 14, Platts data showed. The November/December spread was pegged at a contango of 47 cents/b, down 2 cents/b over the same period.