Spreads steady for Dubai crude futures as market awaits fresh cues

Singapore — Benchmark Dubai crude futures intermonths were mostly steady at noon Oct. 1 amid poor Asian demand outlook, as market participants awaited fresh cues including the release of Middle East official selling prices.

At 12 pm Singapore time (0400 GMT), the November/December Dubai crude futures spread was pegged at 26 cents/b contango, unchanged from the assessment at the Asian close on Sept. 30, S&P Global Platts data showed.

The December/January spread was pegged at 29 cents/b contango at noon on Oct. 1, slightly lower than the minus 27 cents/b assessed at the Asian close on Sept. 30.

The intermonth spreads have been largely rangebound in the last week as sentiment was steady amid unchanged supply-demand fundamentals.

Market participants noted that poor refining margins may continue to cap demand from Asian refiners towards the end of the year.

Middle distillates oil, typically the most profitable oil products to be produced at a refinery, have fallen to multi-year lows as movement restrictions globally from the coronavirus pandemic continue to hamper demand.

Second-month gasoil swap crack versus Dubai swap averaged at 18-year lows of $3.47/b for the whole of September, the lowest since July 2002 when it averaged at $3.32/b, Platts data showed.

Similarly, second-month jet fuel swap crack verus Dubai swap fell to record lows of minus 38 cents/b average in September, lower than the minus 23 cents/b seen in April when the pandemic began to impacting air travel.

In addition, competition from attractively priced barrels from other region could limit spot demand for Middle East crude, said market participants.

The December Brent/Dubai Exchange Futures for Swaps spread -- an indicator of Dubai's strength relative to Brent -- narrowed from 19 cents/b premium on Sept. 30 to 9 cents/b premium at noon on Oct. 1, Platts data showed.

A narrowing Brent/Dubai EFS will make Dubai-linked crude oil less competitive compared to Brent-linked crude.

Market participants will also be keeping an eye on the release of official selling prices from Middle East producers in the coming days.