Brent/Dubai August EFS near-steady; market absorbs OPEC+ decision

The front-month Brent/Dubai Exchange of Futures for Swaps, or EFS, spread was near-steady midmorning Asia trading June 2 as market participants digested the OPEC+ decision to proceed with easing of supplies on the back of a brighter global demand recovery.

The August Brent/Dubai EFS spread was pegged at $3.26/b at 11 am Singapore time (0300 GMT) on June 2, narrowing 3 cents/b from the Asian close on June 1, 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 wider EFS makes crude priced against Dubai more economically attractive for Asian refiners compared with Brent-linked ones.

OPEC and its allies will follow through on plans to hike crude production through July, ministers announced June 1, as oil prices broke through the $70/b ceiling amid forecasts of a tight market ahead.

Sources said strong demand in the West as well as a gradual recovery in Asia can absorb the oil being released into the market by the OPEC+ alliance.

"OPEC+ decision [to ease cuts] is the group's way of telling the market that demand is coming back," said a trader with a north Asian refinery.

The continuing pandemic in Asia and the prospect of sanctions relief for Iran have the producer coalition in a wait-and-see mode.

OPEC will next convene June 24 and then hold an expanded meeting July 1 with Russia and nine other partners in the OPEC+ supply accord to decide on production quotas for August and beyond.

At midmorning in Singapore, the August/September Dubai time spread was pegged at 52 cents/b, widening 2 cents/b from the close on June 1, Platts data showed.

The September/October Dubai time spread was pegged at 48 cents/b, narrowing 1 cent/b from the previous day.