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Dubai futures: Spreads trade sideways as traders mull Saudi repairs timeline

  • Author
  • Eesha Muneeb
  • Editor
  • Nurul Darni
  • Commodity
  • Oil

Singapore — Intermonth spreads for benchmark Dubai crude futures were largely trading sideways mid-morning in Asia on Monday, as market participants digested news report that Saudi Aramco may take longer than expected to repair its attacked facilities in Abqaiq.

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A report from the Wall Street Journal published late Sunday night quoted contractors hired by Aramco for repair works and officials within the company stating that the attacked facilities could take several months to restore operations to full working order.

This is in contrast with the 10-week timeline that Saudi Aramco has officially committed to in its official statement on the matter.

The prompt October/November Dubai futures spread was up at $1.53/b at 11 am in Singapore (0300 GMT) Monday, from $1.52/b assessed at 4:30 pm (0830 GMT) Friday evening.

The November/December spread was notionally assessed at $1.31/b on Monday morning, compared to $1.36/b on Friday.

The report by the Wall Street Journal echoed what industry analysts told S&P Global Platts last week, the consensus of which was that Saudi oil output is unlikely to be fully restored in the next couple of weeks despite assurances by Saudi officials.

"They could say production capacity is 11 million or 12 million b/d but can you process 12 million b/d of crude and bring it to consumers, that's the question," Iman Nasseri, managing director for the Middle East at FGE Energy, had told Platts recently. "At the moment bringing everything back to normal by the end of September is very unlikely."

Customers in Asia so far have reported minimal disruption to their September-loading barrels from the kingdom, but buyers remain cautious about scheduled volumes for October loading, allocations for which were confirmed earlier this month prior to the attacks.

The impact has also trickled into the spot market prices of November-loading cargoes, which are currently trading through September.

Price differentials of light sour crude grades trading in the spot market in Asia skyrocketed last week, and are expected to remain relatively firm through the remaining of the month, said traders.

The Dubai cash/futures spread was assessed at $2.87/b on Friday at 4:30 pm in Singapore, down 11.5 cents from the six-year high of $2.985/b assessed the day before.

--Eesha Muneeb,

--Edited by Nurul Darni,