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Brent/Dubai spread dives below $3/b as inventories rise

Singapore — Dubai's discount to Brent narrowed mid-morning in Asia Wednesday, as a build in US inventories pushed the crude oil complex lower.

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The Brent/Dubai Exchange of Futures for Swaps -- a spread tracking Brent-linked crude prices versus Dubai-linked ones -- narrowed to $2.97/b as of 11 am in Singapore (0300 GMT) Wednesday.

The EFS spread was assessed at $3/b at the close of trading in Asia on Tuesday at 4:30 pm Singapore time (0830 GMT).

The spread, which typically indicates arbitrage viability of Brent-linked grades into Asia, has narrowed sharply from $3.58/b assessed at the close of trading on Friday to below $3/b Wednesday morning, S&P Global Platts data showed.

The latest report from the American Petroleum Institute showed a build of 4.85 million barrels of crude stocks in the US for the week ended June 7, according to analyst reports.

The data dampened sentiment across global crude markets, underscoring the impact from the US-China trade conflict and lukewarm oil demand in other markets.

A narrowing Brent/Dubai spread typically points to weaker sentiment for Brent compared with Dubai.

Spreads for Dubai swaps were marginally lower in mid-morning trading hours Wednesday, with the August/September intermonth spread down to 43 cents/b at 11 am (0300 GMT), compared with 44 cents/b at 0830 GMT Tuesday.

Similarly, the September/October spread was down to 35 cents/b at 0300 GMT compared with 38 cents/b at the close of trading at 0830 GMT Tuesday.

The intermonth structure in the cash Dubai complex softened Wednesday morning as well, opening physical cargoes trading for August loading to further downside, crude traders in Asia said.

The August/October cash structure for Dubai dropped to $1.79/b as of 0300 GMT Wednesday morning, from $1.93/b at 0830 GMT Tuesday.

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The Platts crude Market on Close assessment process continued to see offers for light sour crude cargoes Tuesday, with sellers Chinaoil and Total offering clips of Abu Dhabi's Murban and Das Blend grades during the process.

Both sellers offered a 500,000-barrel cargo each of Murban, for loading over August 1-25 and with bill of lading month pricing terms stipulated in Tuesday's MOC. The offers were priced at a premium of 15 cents/b over the Murban OSP.

Similarly, Chinaoil and Total each offered a 500,000-barrel cargo of Das Blend for the same laycan and pricing terms during MOC on Tuesday. The Das Blend cargoes were priced at a premium of 10 cents/b to the Das OSP.

All four offers remained standing at the close of MOC at 4:30 pm in Singapore (0830 GMT) Tuesday, without any takers.

Platts assessed Murban at $62.35/b, or a premium of 5 cents/b to its OSP on Tuesday. Das Blend was assessed at $61.80/b, at parity to its OSP.

--Eesha Muneeb, eesha.muneeb@spglobal.com

--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com