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Middle East sour crude oil grades surge to 4-year highs amid global crude rally

  • Author
  • Eesha Muneeb    Avantika Ramesh
  • Editor
  • Jonathan Fox
  • Commodity
  • Oil

Singapore — Prices of Middle East sour crudes surged to four-year highs within the first two trading days of October, carried by a global rally in crude oil, market sources said Tuesday.

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The price for December Dubai crude, currently the front month in the Platts Market on Close assessment process, rose to $82.95/b at the end of Asian trading hours on Tuesday. It was $80.80/b Monday, marking a surge of $2.15/b on the day and a four-year high for cash Dubai M1.

Cash Dubai M1 was last higher in 2014, when the flat price touched $83.61/b on October 31, 2014, according to S&P Global Platts data.

Global sentiment for crude oil remained bullish on supply side concerns stemming from questions about OPEC's remaining spare capacity amid rising end-year demand and impending Iranian sanctions, market participants said.

"Market focus is on how much an OPEC production increase will compensate for the supply losses due to Iranian sanctions," ANZ analysts said in a note.

The increase in Dubai prices was more than simply a structural result of the global crude complex moving higher, sources said. Data on the screen of the Intercontinental Exchange showed active volume traded on the various Brent/Dubai spread derivatives available on the exchange Tuesday.

"November Brent/Dubai [instruments] on ICE also going through in very large numbers [volume wise] - 4 to 5 million barrels done today," a Singapore-based trader said Tuesday.

At the close of business at 4:30 pm Singapore time (0830 GMT), approximately 4.6 million barrels equivalent of November and December Dubai-related contract volume had been traded via ICE, including private broker deals, the data showed.

The volume includes the November/December Dubai 1st line spread, as well as the December Brent/Dubai Exchange Futures for Swaps spread.

The robust trading activity on the Dubai derivatives continued from the Monday, when approximately 3.69 million barrels equivalent of these contracts traded as of 4:30 pm Singapore time, for a combined total of 8.29 million barrels in the first two days of October.

December Brent/Dubai EFS -- an indicator of Dubai's strength relative to Brent -- kept pace with the global rally in December ICE Brent crude futures this week. The EFS has kept steady at $3.54/b since Monday, despite the sharp uptick in the Brent half of the spread, implying equivalent strength for the Middle East sour crude grade.

--Eesha Muneeb,

--Avantika Ramesh, --Edited by Jonathan Fox,