Dubai futures rangebound in contango amid unclear demand outlook

Singapore — Benchmark Dubai crude futures remained rangebound in contango Oct. 6 from the previous session amid a unclear demand outlook as the market awaited fresh drivers.

At 11 am in Singapore (0300 GMT), the November/December Dubai crude futures spread was pegged at a contango of 32 cents/b, narrowing 2 cents/b from the Asia close on Oct. 5, S&P Global Platts data showed. The December/Jananuary spread was pegged at a contango of 31 cents/b, also narrowing 2 cents/b over the same period.

Opinions were mixed on the demand outlook for the remainder of the year.

"This month is for December loading so could be better, as it's for January arrival, when new quotas would already have come to refineries in China," a crude oil market source said.

Buying from China has thinned in the past two months from the first half of the year, when prices were more attractive, resulting in high inventories.

Other market participants were concerned that the resurgence in COVID-19 cases in several parts of the world was threatening to derail global oil demand recovery.

"Seasonal demand from North Asia would pick up in winter to a certain extent, but it depends more on the COVID-19 situation," one source said.

For now, trade sources are awaiting the release of new official selling prices from Saudi Aramco, which are expected within days, for fresh pricing cues.

Reflecting persisting market weakness, the spread between December cash Dubai and same-month Dubai futures fell 4.5 cents/b day on day to be assessed at a discount of 94.5 cents/b at the Asia close Oct. 5, Platts data showed.

The spread remains at a four-month low -- it was last lower on May 28 at a discount of $1.33/b, the data showed.