Crude MOC: Dubai structure firms on improved spot demand outlook for May

Singapore — The Dubai cash/futures spread rose day on day at the end of the Platts Market on Close assessment process Friday, with traders expecting spot market demand to fare better than initially expected for the May trading cycle.

Market participants initially feared refiners would opt to maximize monthly volumes from term nominations, which were negotiated and concluded this week between Asian refiners and Middle East producers.

Despite a combination of attractive pricing and plentiful volume offered by producers for April-loading cargoes, several refiners chose to defer additional uptake on term volumes, they told S&P Global Platts.

This increases the likelihood of refiners looking to barrels offered on the spot market for May-loading as the month wears on, said traders. However, overall demand remains weak, they warned.

"Our refinery is still running the LP and we expect to issue tenders [to procure spot cargoes] starting next week for our usual requirements," a source with a North Asian refiner told Platts on Friday.

"At least in China, the market is starting to recover," said one trader, but added that global demand would start to suffer as the effect of the coronavirus spreads across the West.

The May Dubai cash/futures spread was assessed at minus $2.41/b on Friday, up from minus $2.57/b assessed the day before.

Additionally, the May Oman spread to May Dubai futures was assessed at minus $2.27/b on Friday, barely changed from Thursday's level of minus $2.28/b.

Sentiment for Oman prices is typically representative of Chinese crude demand, with 70% to 80% of total Oman crude exports flowing into the country each month.

Global crude demand continued to worsen, according to specialist reports, with the coronavirus pandemic forcing countries to shutter airports and borders, impacting energy flows, trade and transport.

The US Energy Information Administration on Wednesday slashed another 660,000 b/d off its 2020 global oil demand growth outlook, now predicting a growth of 370,000 b/d from 2019.

In January, EIA had predicted 2020 global oil demand growth at 1.34 million b/d, before the coronavirus outbreak became severe in China and started spreading globally.

Most of the reduction was in Chinese demand, where EIA cut expected growth for 2020 to 100,000 b/d, down from 500,000 b/d in January.