Brent/Dubai April EFS narrows; traders expect OPEC+ rollback

Singapore — The front-month Brent/Dubai Exchange of Futures for Swaps narrowed in midmorning Asia trading Feb. 26 as market participants eyed demand for May-loading barrels on expectations of an increase in oil supplies post the OPEC+ meeting.

The April EFS was valued at $2.76/b at 11 am Singapore time (0300 GMT) Feb. 26, narrowing 7 cents/b from the Asian close on Feb. 25, S&P Global Platts data showed.

The Brent/Dubai EFS is a key indicator of the spread between light, sweet and heavy, sour crudes, and a narrower EFS makes crude priced against Dubai less economically attractive for Asian refiners compared with Brent-linked ones.

Demand from Asia remained subdued for April-loading barrels as Chinese buying was muted due to the holiday-induced lull in purchasing activity, traders said.

"Right now, demand [seems] stable. Next month's demand will still be stable, but China [remains] a big question mark," said a trader based in Singapore.

Flow of arbitrage barrels from West Africa and the US, coupled with an expected rollback of OPEC+ supply cuts, would likely pressure the Middle East crude oil market when trade commences next month, said a crude oil trader.

"US arbitrage will definitely affect market moving forward," said the trader in Singapore. The flow of US crude to the region temporarily halted on supply disruptions caused by winter storms, but is expected to revive with warming temperatures.

At midmorning trading Singapore time (0300 GMT), the April/May Dubai time spread was valued at 46 cents/b, widening 3 cents/b from the previous day, Platts data showed.

The May/June Dubai intermonth spread was pegged at 54 cents/b, narrowing 2 cents/b from the Asia close Feb. 25, the data showed.