CRUDE MOC: Dubai complex weakens amid poor demand outlook

New York — The Middle East crude complex fell Oct. 1 as sentiment on the fresh December-loading trade cycle was affected by the bearish demand outlook.

Benchmark December cash Dubai was assessed at a discount of 72 cents/b to same-month Dubai futures at the 4:30 pm Singapore (0830 GMT) close on Oct. 1.

The spread, a key indicator of spot market sentiment for sour crude in Asia, was lower than the 60 cents/b discount assessed on Sept. 30.

It is also below the average for the whole of September of a 53 cents/b discount, S&P Global Platts data showed.

Similarly, December cash Oman was assessed at minus 62 cents/b against same-month Dubai futures on Oct. 1, down from both the 28 cents/b discount assessed the previous day and the 46 cents/b discount average for the whole of September, the data showed.

Sentiment was hit by the weak demand outlook, with demand from Asia's biggest buyer, China, expected to remain limited in the near term because of low margins, high product stocks and lackluster domestic and global demand for oil products.

"Most people are betting on new, first-quarter [2021 crude import] quota for teapots [and] most people [are] saying they could buy more. But fundamentally, China [has] lost its [product] export [market] because [oil products] demand globally has not changed. Also, Chinese [domestic] demand is not there," said a North Asian crude oil trader.

Reflecting weak demand for oil products, middle distillate product margins have slumped, with second-month gasoil swap crack versus the Dubai swap averaging at 18-year low of $3.47/b in September, Platts data showed.

This demand outlook comes at a time when the OPEC+ alliance continues to ease its production cuts. OPEC and its allies in August rolled back their historic 9.7 million b/d production cut accord to a 7.7 million b/d cut anticipating a pick-up in global oil demand.

"[The producers] want to export more so supply will increase, [but] demand is unchanged [at low levels]," a crude oil trader said.

OPEC is scheduled to next meet in Vienna on Nov. 30, with the next OPEC+ monitoring committee meeting on Oct. 19.