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Chad's Doba crude hits record high on demand for low sulfur grades

London — Chad's low sulfur Doba crude, which has been rising consistently in value this year as new specifications and higher quality boosted buying interest, has hit a record high, as assessed by S&P Global Platts.

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Doba rose 50 cents/b Thursday to Dated Brent plus $2.00/b Thursday, the highest level since Platts started assessing the grade in August 2015. It stood at Dated Brent minus $3.00/b on January 2.

"Doba has traded at outrageous numbers of Dated plus $2.15/b. The general heavy sweet WAF complex, including Angolan grades like Dalia and Pazflor, have seen ultra record high numbers in the June cycle," a crude trader said. "The trading community has never seen such high numbers before for those grades."

All Doba's June loading program, which was one cargo shorter than May, were cleared within two weeks into the East as a result of strong demand from independent Chinese refineries for heavier sweet barrels, traders said.

Doba is a popular crude for Chinese refineries, along with Angola's Dalia and Pazflor and Republic of Congo's Djeno, as its heavy but sweet properties offer attractive yields.

"The new [Doba] field is superior [and produces] ultra low sulfur crude,"a West African crude trader said.

That is a quality particularly sought after by refiners ahead of the global sulfur cap for marine fuel being cut to 0.5% on January 1, from 3.5%, as per International Maritime Organization regulations.

Doba's low sulfur content of 0.09%, according to the latest crude assay seen by S&P Global Platts, makes the grade particularly interesting for refineries ahead of the new regulations.

Doba, which began production in 2003, has historically had a small customer base due to its high acidity, meaning it could only be refined by complex refineries that had the required equipment to deal with such crude.

But its acidity levels have almost halved over the past few years due to the inclusion of lower-acidity output in the crude stream following the start-up of new fields, Badila and Mangara, according to recent assay data.

Then the June trading cycle, which saw several programs being smaller than usual, saw heavy sweet grades in West Africa reach record levels as well as Angola's medium to lighter sweet grades, which performed exceptionally well, sources said.

The move has been helped by the overall tightening in global supply of heavy and medium sweet crude as a result of the US decision not to extend waivers to buyers of sanctions-hit Iranian crude, alongside sanctions on Venezuela and OPEC's ongoing output cap.

-- Kristi Rotlaender, kristi.rotlaender@spglobal.com

-- Edited by Dan Lalor, daniel.lalor@spglobal.com