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Buyer reluctance brings Middle East crude spot market to a standstill for April trading

Singapore — Crude futures spreads traded in a range mid-morning Asia Friday and market activity was largely non-existent for the April trading cycle, as buyers stuck to the sidelines on hopes of lower prices.

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"All buyers are waiting for the market to come off more, and also a lot of refineries are cutting runs or in turnarounds, so they are not in a hurry [to buy]," a trader with a Southeast Asian refinery said Friday morning.

Sellers and traders holding Middle East April-loading crude barrels had been hopeful of some buy-side spot market tenders to have emerged towards the end of the week, but little to no buying interest was evident in the spot market this week, traders told S&P Global Platts.

Furthermore, traders said some overhang from the March trading cycle was still available in the spot market, further reassuring buyers of ample supply.

Meanwhile, intermonth spreads for Dubai crude futures traded in a well-worn range Friday morning, with the March/April spread pegged at minus 10 cents/b as of 11 am Singapore time (0300 GMT), little changed from its assessment at minus 11 cents/b at 4:30 pm (0830 GMT) Thursday.

Placid movement on spreads was seen further forward, with the Dubai April/March futures spread pegged at 1 cent/b Friday morning, up from the minus 4 cents/b assessed on Thursday.

The May/June spread, which had been assessed at minus 1 cent/b Thursday, was up at 5 cents/b by 11 am Friday morning.

Meanwhile, Middle East producers were on the lookout for further run cuts in Asia, given bleak demand and product margins, market sources told Platts.

Refineries could decide to slow down run rates on a well-supplied products market on one hand, but cheaper crude prices could encourage them to ramp up production on the other, a market source said.

"I believe [some North Asian refiners] will still go on turnarounds, but maybe others would be more flexible if crude gets cheap enough," the source said.

Traders of Middle East crude were waiting anxiously for Qatar Petroleum to release its monthly tender offering Al-Shaheen crude this week. As of Friday morning, the tender had not yet been issued, they told Platts.

The Qatari tender is often used as a trading springboard to kick-off every cycle, allowing traders to gauge buyer sentiment for spot market grades.