CRUDE MOC: Platts Oman/Dubai spread steadies with Chinese buying interest on hold

Singapore — Benchmark cash Oman's premium over cash Dubai eased this week, as buying interest from China for Oman crude remained at bay while crude market participants awaited refinery requirements and monthly term confirmations from producers, traders told S&P Global Platts Tuesday.

July cash Oman was assessed at $27.26/b, coming in 36 cents/b over July cash Dubai on Tuesday at the end of the Platts Market on Close assessment process for Middle East crude.

The spread averaged 51 cents/b for the week of May 4-8, Platts data showed, with initial expectations for a firmer Oman hinging largely on buying interest from China, said traders.

The spread between the two averaged 10 cents/b over April, but has widened in recent weeks as Chinese refiners return to the market after coronavirus-related lockdowns in the country were eased.

However, buyers have kept to the sidelines thus far while analyzing and comparing various official selling prices in the Middle East crude market, said traders. Prices may heat up when trading begins in the coming days, they said.

Premiums for other Chinese-centric crude grades that are priced against Platts front-month Dubai and Oman crude assessments are also expected to trend higher this month as the refining behemoth picks up June- and July-loading cargoes at relatively inexpensive prices in the spot market.

This includes Iraq's Basrah Light and Russia's ESPO Blend crudes, both of which are favored by Chinese independent refiners.

The demand outlook for the rest of Asia continues to be bearish, market participants said Tuesday.

However, production cuts from OPEC+ members coming into effect over May could help ease some supply pressure in Asia, they said.

State-owned Saudi Aramco was directed to cut its June oil production by 1 million b/d below its OPEC+ quota, to 7.492 million b/d, the official Saudi Press Agency reported this week.

This would be Saudi Arabia's lowest production level since June 2002, according to OPEC records.

Additionally, the UAE said it will cut production by an additional 100,000 b/d in June to 2.346 million b/d, which would be its lowest production level since November 2010. Kuwait proposed to cut a further 80,000 b/d in June to 2.09 million b/d, which would be its lowest since February 2003.