Singapore — Fundamentals for cash Dubai and Oman benchmarks diverged Friday, as an uptick in demand from China buoyed Oman premiums while Dubai continued to sink lower into contango in an otherwise demand-light market.
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April cash Oman's spread to April Dubai futures rose sharply from parity on Thursday to a premium of 37 cents/b on Friday at the end of the Platts Market on Close assessment process for Middle East crude.
Crude traders said the rise pointed to physical demand in the spot market, specifically from Chinese independents, although no firm deals were heard as of Friday evening in Asia.
Spot trading of Oman cargoes typically picks up in the latter half of the cycle each month.
Traders also pointed to unworkable arbitrage economics for competing crude mainstays for the Chinese market, despite lower freight in recent days. Russia's medium sour Urals crude, for instance, was heard quoted in the spot market at premiums of around $1.75/b over June ICE Brent futures on Friday on a DES Qingdao basis. This is down from premiums around $2/b last week for April arrival cargoes of the grade, according to market indications received by Platts.
Comparatively, April-loading cargoes for Oman were assessed at $57.08/b on Friday on a CFR North Asia basis, equivalent to a premium of 54 cents/b over June ICE Brent futures at 4:30 pm in Singapore (0830 GMT). Cargoes loading from the Persian Gulf may take between four to six weeks for a North Asian voyage.
Meanwhile, April cash Dubai sank lower into contango on Friday, driven by absence of demand in Asia for the wider array of Middle East sour crude.
The Dubai cash/futures spread was assessed at minus 13 cents/b Friday, down from minus 3 cents/b for Thursday.
Offers quoted from sellers for light and medium crudes sank lower day on day, as evidenced in market discussions as well as on the Platts MOC.
Seller Total offered one 500,000 barrel clip of April-loading Murban crude, which moved from an initial discount of 60 cents/b to a final offer of minus 90 cents/b by the close of the MOC, without attracting a buyer.
Similarly, ExxonMobil offered a medium-sour Upper Zakum cargo Friday, moving the offer down from minus 60 cents/b to minus 70 cents/b at 4:30 pm in Singapore. Both offers were priced against the grades' respective OSPs.
On the other hand, the MOC saw five partials of Dubai crude change hands on Friday, bringing the total count so far this month to 57.
Under the partials trading mechanism, the seller declares a full 500,000 barrel cargo to the buyer after 20 partials have been traded for the same loading month between the two companies.
For Dubai partials, the seller has the option to deliver a Dubai, Oman, Upper Zakum, Al-Shaheen or, with a quality premium, Murban cargo to the buyer.