DUBAI FUTURES: Brent/Dubai EFS widens on vaccine news, uncertainty remains

Singapore — The Brent/Dubai Exchange of Futures for Swaps widened to a near three-month high at mid-morning in Asia on Nov. 11 as the news of the COVID-19 vaccine and rise in oil prices helped maintain the positive sentiment.

The EFS was pegged at a premium of 42 cents/b at 11 am Singapore time (0300 GMT) on Nov. 11, rising 12 cents/b from the assessment of 30 cents/b premium at the 4:30 pm Asia close on Nov. 10, S&P Global Platts data showed.

It was last assessed higher at 44 cents/b on Aug. 17, the data showed.

The EFS widened on the back of an uptick in the Brent crude complex as markets reacted to the news of the Pfizer vaccine's effectiveness in a phase 3 trial.

January ICE Brent was pegged at $43.96/b at mid-morning in Asia on Nov. 11, $1.22/b up from the Asia close of $42.74/b on Nov. 10.

With the EFS at 42 cents/b, this brings the January Dubai futures to $43.54/b at 11 am Singapore time on Nov. 11.

Market participants were not overly buoyant with the rise in EFS and attributed it purely to the news of the vaccine.

"EFS has risen on the back of the vaccine news and has nothing to do with the physical side. Oil prices are up and so are equities and the EFS is therefore co-related to these aspects," said a Singapore-based crude analyst.

"The numbers we are seeing could be an overreaction as there is no specific timeline for the vaccine to be released ... I expect some sort of correction eventually," the analyst added.

Dubai futures spreads also strengthened at mid-morning in Asia on Nov. 11 with the December/January spread pegged at minus 4 cents/b at 11 am Singapore time, 4 cents/b higher from the assessment at the Asian close on Nov. 10, Platts data showed.

The spread was assessed at minus 8 cents/b on Nov. 10 -- the highest recorded since July 22, when it was assessed at minus 3 cents/b, the data showed.

The January/February spread was pegged at minus 15 cents/b at mid-morning on Nov. 11, 3 cents/b higher from Nov. 10 assessment.

Market participants were digesting the fresh sets of official selling prices from Kuwait Petroleum Company, which raised its Asia-bound December OSP for Kuwait Export Crude by 10 cents/b to minus 40 cents/b against Platts Dubai and DME Oman average. It reduced the Asia-bound December OSP for Kuwait Super Light by 10 cents/b to minus 70 cents/b against Platts Dubai and DME Oman average.