DUBAI FUTURES: Intermonths higher on emergence of Indian crude oil demand

Singapore — Dubai futures intermonth spreads strengthened at mid-morning in Asia on Nov. 12 on the back of Asian demand boosting overall market sentiment.

The December/January spread was pegged at minus 1 cents/b at 11 am Singapore time (0300 GMT) on Nov. 12, 3 cents/b higher from the assessment at the Asian close on Nov. 11, S&P Global Platts data showed.

This was the highest since July 16, when it was assessed at 12 cents/b premium, the data showed.

The January/February spread was pegged at minus 9 cents/b at mid-morning on Nov. 12, 3 cents/b higher from Nov. 11 assessment.

Intermonths continue to strengthen as sentiment on the Middle East sour crude market remained buoyant on the emergence of prompt demand from India's refiners.

MRPL has issued its second tender for the month seeking 1 million-2 million barrels of high sulfur crude for delivery over Jan. 1-5. The tender will close on Nov. 16, with next day validity.

Talk indicated that the refiner had purchased 2 million barrels of Russia's CPC Blend, for delivery over Dec. 20, 2020, to January 3, 2021, in the earlier tender that closed on Nov. 9.

Meanwhile, IOC has also issued two tenders for various crude oil grades including from Middle East and West Africa for January and February arrival. The tenders were expected to close Nov. 12.

The refiner had purchased West African crude barrels in a tender that closed in the week ended Nov. 5, traders said.

Although the recent purchases from these refiners have been of crude from outside the Middle East region, sentiment has remained largely optimistic for the region's crude oil.

"[Spreads are higher as they are] more sentiment driven [with] expectation of China and India buying, vaccine news driving sentiment, expectations of winter demand [from North Asia]," said a Singapore-based crude trader.

Meanwhile, the Brent/Dubai Exchange of Futures for Swaps narrowed marginally at mid-morning in Asia on Nov. 12 as the Brent crude complex slowed despite promising news on potential OPEC+ cuts and a COVID-19 vaccine.

The EFS was pegged at a premium of 36 cents/b at 11 am Singapore time on Nov. 12, narrowing 2 cents/b from the assessment of 38 cents/b premium at the 4:30 pm Asian close on Nov. 11, S&P Global Platts data showed.

The EFS is often tracked as an indicator of North Sea low sulfur crude value versus Middle East high sulfur crude, and a wider EFS makes crude priced against Dubai more economically attractive compared to Brent-linked ones.

Market participants expect EFS to continue easing from the current highs amid weak European demand while actual timelines for vaccine availability remain hazy.