DUBAI FUTURES: Intermonth spreads narrow as Asian demand varies

Singapore — Dubai futures intermonth spreads narrowed at midday in Asia on Nov. 13 amid contrasting Asian demand seen in the Middle East sour crude market.

The December/January spread was pegged at a backwardation of 2 cents/b at 11 am Singapore time (0300 GMT) on Nov. 13, 2 cents/b lower from the assessment at the Asian close on Nov. 12, S&P Global Platts data showed.

The January/February spread was pegged at minus 14 cents/b at mid-day on Nov. 13, 4 cents/b lower from Nov. 12 assessment.

While Indian demand was evident from the recent tenders for various crude grades in the past few days, Chinese demand has not kept pace with expectations, market participants said. Demand from Japan could increase due to domestic winter demand, they added.

"Chinese demand is still good but with a large line up of large crude carriers waiting at Chinese ports to discharge, refiners will ease their pace of buying," said a Singapore-based crude oil trader, adding that Chinese demand will pick up once the port congestion eases.

"Japan expects a severe winter this year so crude oil demand into the country will also go up as refiner run rates increase," the trader added.

Market participants were awaiting the outcome of Qatar's Al-Shaheen crude tender, which is widely seen as a curtain raiser in the Middle East sour crude market. The outcome of the tender is expected to provide a clear indication of Asian buying appetite.

In its monthly tender, Qatar Petroleum for the Sale of Petroleum Products, or QPSPP, is offering two cargoes of 500,000 barrels each of Al-Shaheen crude for loading over Jan. 2-3 and Jan. 23-24 and one 500,000 barrel cargo of January-loading Qatar Marine crude. The tender closes Nov. 16 with next day validity.

The market also witnessed the release of the Iran official selling prices late on Nov. 12. State-owned National Iranian Oil Company, or NIOC, cut prices for its December loading Asia-bound Iranian light and Iranian heavy grades by 10 cents/b and 5 cents/b, respectively.