Asia's crude market firm amid fresh Middle East spot deals

Singapore — Benchmark Dubai crude futures rose in mid-morning trade in Asia Thursday, tracking gains in global oil prices.

Intermonth spreads firmed as well, reflecting continued strength in the spot market, as evidenced by a round of fresh deals concluded midweek, said traders.

At 11 am Singapore (0300 GMT), the July Dubai futures contract was pegged at $36.24/b, or 4.3% higher, compared to its assessment of $34.76/b at 4:30 pm Singapore close Wednesday.

The rise was in line with an overnight upmove in ICE Brent futures, which jumped 4% from previous Asian close, to be pegged at $36.07/b at 11 am Thursday morning in Singapore.

However, with intermonth spreads for Dubai futures also firming on the back of continued strength seen in the Middle East sour crude market in Asia, the Brent/Dubai Exchange Futures for Swaps widened a few notches as the Dubai end of the spread strengthened at a relatively sharper pace than Brent.

At 11 am, the July EFS was pegged at minus 17 cents/b, implying a weaker Brent than at Wednesday's Asian close, when the EFS was assessed at minus 9 cents/b.

Several spot market tenders concluding between Wednesday and Thursday are expected to support spot price differentials of Middle East sour crude grades, especially for medium sour crudes such as Upper Zakum and Oman, said crude traders Thursday.

Recently, a Japanese refiner purchased several cargoes of Abu Dhabi's Upper Zakum at premiums of around $1.50/b to the OSP, and tenders concluding Thursday would likely see similar premiums, they said.

A buy-side tender from Chinese independent refiner Rongsheng concluded with the refiner picking up 2 million barrels of medium sour crude, said crude traders in Asia Thursday. However, further details weren't immediately available.

Additionally, July loading cargoes of light sour grades Murban and Das had recently traded in the spot market at premiums of around $1.30/b to $1.40/b over their OSPs.

Murban cargoes were now being offered at OSP plus around $1.50/b in the spot market, said a Singapore-based trader.

Meanwhile, intermonth spreads for Dubai futures strengthened Thursday morning in Asia, with the June/July Dubai futures timespread pegged at minus 27 cents/b at 11 am (0300 GMT). This was up a few notches from its assessment at minus 36 cents/b at the 4:30 pm close in Singapore Wednesday.

Similarly, the July/August spread for Dubai crude futures ticked a few notches higher to be pegged at minus 37 cents/b Thursday morning. It had been assessed at minus 40 cents/b at Wednesday's close.