Singapore — The Middle East crude oil complex, led by Dubai crude futures, moved higher Thursday morning in Asia, with global crude benchmarks rallying on optimism that the spread of the coronavirus, or Covid-19, is slowing as well as on the back of an uptick in demand from Europe.
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The strength in the Dubai marker is "driven by Brent structure," a Singapore-based crude trader said, echoing the view of other Asian traders.
Demand in Europe for Brent-linked crude was healthier with refineries ramping up run rates, market participants in Asia said. The resulting strength had somewhat of a knock-on effect on crude globally, including Dubai, they added.
The prompt March/April Dubai futures spread was still languishing in a contango of 6 cents/b Thursday morning at 10 am Singapore time (0200 GMT), but further down the curve, intermonth spreads had lifted out of negative territory.
Even the March/April was higher than the minus 12 cents/b assessment on Wednesday evening at the 0830 GMT close in Asia.
Further down the curve, April/May rose out of the minus 3 cents/b contango assessed Wednesday, to a backwardation of 3 cents/b Thursday morning.
The May/June spread, assessed at parity Wednesday evening, was a few notches stronger at 4 cents/b backwardation early Thursday.
Meanwhile, closer to home, Middle East producers were reported to have concluded March allocations. While some Saudi term customers based in China were reportedly asking for lower volumes in March, market sources said that allocations were largely within normal operational tolerances for Saudi Aramco and Iraq's SOMO customers in Asia.
"No cuts I think, all normal," according to one Basrah equity holder based in Singapore.
Middle East market participants are expecting buyers to emerge in the spot market by Thursday or Friday this week, to kick off April trading. Buying interest in sour crude cargoes has been severely limited so far this month, sellers reported.