Singapore — The DME Oman crude oil price at the 4:30 pm Singapore (0830 GMT) close Wednesday was at record highs against key crude oil benchmarks amid strong demand from Asian end-users and as market participants look to cover their shorts before the end of the month, traders said Wednesday.
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The DME marker price for November 2018 Oman crude oil was pegged at $88.96/b at 4:30pm Singapore close, up $6.43/b day on day.
On an outright basis, DME Oman price on Wednesday was the highest since October 9, 2014, when it was at $90.51/b, S&P Global data showed.
DME Oman was at a premium of $6.79/b to ICE Brent -- the highest since S&P Global Platts started publishing the daily marker price on December 10, 2007.
Similarly, DME Oman was at a premium of $10.45/b against the November Dubai crude oil swap, also the highest recorded. The previous high was on September 30, 2011, at $6.22/b.
DME Oman was at a record high $8.91/b against November cash Dubai crude. Platts assessed the November cash Dubai at $80.05/b on Wednesday.
Traders attributed the volatility in the Middle Eastern crude futures contract to low end-of-month liquidity as well as bullish momentum from Chinese independent refiners.
Oman crude can be prone to sharp price swings as the contract nears end-of-month expiry due to low liquidity, traders said.
Buyers and sellers of Oman typically look to cover outstanding positions before the contract expires on the last trading day of the month, which would be September 28 for the November contract.
"If you sell out Oman here, you make all the money without refining it," said a Singapore-based crude oil trader, adding that the price has risen as "people [are] caught short."
Some of the bullish momentum could also be attributed to Chinese independent refineries that have recently gone on a buying spree for sour crude barrels as they look to fill crude import quotas before the end of the year.
The DME is a popular avenue for sour crude market participants to bid or offer the crude grade in 1,000 barrel lots as a futures contract with the option for physical delivery.
A total of 3,470 lots traded on the DME front-month contract by 4:30 pm Singapore close.
Almost 81% of Oman's total crude exports went to China in August, while the remainder headed to Japan, India and Myanmar, latest export data from the sultanate's oil ministry showed earlier this month.
--Ada Taib, firstname.lastname@example.org
--Eesha Muneeb, email@example.com
--Edited by Dan Lalor, firstname.lastname@example.org