Singapore — The contango market structure for benchmark Dubai crude futures persisted during mid-morning Aug. 5, against a backdrop of weak demand fundamentals.
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The September/October Dubai crude futures spread was pegged at a contango of 29 cents/b at 12 pm Singapore time (0400 GMT) Aug. 5, widening 2 cents/b from the Asia close on Aug. 4, S&P Global Platts data showed. The October/November spread was pegged at a contango of 27 cents/b, widening 2 cents/b from the Asia close on Aug. 4.
In mid-July, the market structure was flipping from backwardation to contango, before hovering in a contango structure up till this week, Platts data showed.
Market fundamentals were little changed over July, with demand for Middle Eastern crude tepid amid capped refining margins, market sources said.
Meanwhile, it was also uncertain as to whether the current contango structure would deepen and lead to more storage of oil, the sources added.
"I'm not sure if it's enough to encourage a huge shift to that [more storage]... I guess some are still holding tanks from the last time it came," a Middle Eastern crude oil trader said.
Signs of an increase in supply also failed to uplift the crude complex. Middle Eastern crude supply is expected to increase from August as the OPEC+ alliance will ease their production cut to 7.7 million b/d in August until the end of the year, from 9.7 million b/d in May, Platts reported earlier.
In the meantime, market participants continued to keep a lookout for fresh official selling prices, which are expected to be released in the coming days.