Dubai futures intermonth spreads fall as rising supply weighs on sentiment

Singapore — The intermonth spreads for benchmark Dubai crude futures fell in midday trading in Asia Oct. 2 as sentiment in the Middle East sour crude market weakened ahead of the release of key official selling prices.

At 11:40 am in Singapore (0340 GMT), the November/December Dubai crude futures spread was pegged at 37 cents/b in contango, down 7 cents/b from minus 30 cents/b at the 4:30 pm close (0830 GMT) Oct. 1, S&P Global Platts data showed.

The December/January spread was pegged at 35 cents/b in contango at 0340 GMT, down 5 cents/b over the same period.

Sentiment weakened following reports of an increase in crude exports by Russia and Iraq amid expectations of continued weakness in demand.

Russian crude exports are expected to rise 9% month on month to 14.4 million mt, or around 3.4 million b/d in October, according to data released by pipeline operator Transneft Oct. 1.

Meanwhile, Iraq's federal oil exports averaged 2.613 million b/d in September, up from 2.597 million b/d in August, the oil ministry said Oct.1, signaling OPEC's second-largest producer may have failed again to implement compensation cuts to make up for overproduction between May and July.

Iraq had pledged to cut an extra 400,000 b/d in each of August and September to make up for overproduction in May through July in a plan endorsed by Saudi Arabia and its Gulf allies.

That would put Iraq's effective quota at 3.404 million b/d for August and September, including the voluntary extra cuts to compensate for overproduction. The ministry did not publish the country's production figures.

Market participants have said they expect Asia's demand for crude oil to remain capped by lackluster refining margins.

"Demand [from Asian refiners] is not so strong. It could even be a little bit lower [due to poorer margins]," a North Asian crude oil trader said.