Singapore — The Middle East sour crude complex, led by benchmark Dubai crude futures spreads, continued to strengthen in mid-morning trading in Asia Friday, as traders digested overnight developments on reports that Saudi Aramco may have approached Iraq for Basrah crude supplies.
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Dubai's discount to Brent tightened Friday morning in Asia, with the November Brent/Dubai Exchange Futures for Swaps spread notionally pegged at $3.30/b at 11 am in Singapore (0300 GMT), compared to the $3.68/b assessed at 4:30 pm (0830 GMT) on Thursday.
Saudi Arabia has not asked Iraq for crude supplies, Iraqi oil minister Thamir al-Ghadhban said Thursday night, denying reports that his country had fielded a request from its neighbor to compensate for a shortfall caused by last weekend's attacks on two key facilities.
"KSA has never asked us to purchase Iraqi crude oil," Ghadhban told S&P Global Platts, using the acronym for the Kingdom of Saudi Arabia. "We have kept our export and production as they were before."
Backwardation in the Dubai structure rose to a six-year high of $2.985/b Thursday evening, after news first broke of the possibility that Saudi Aramco may take extra volume from Iraq.
"Things seemed to have calmed down a bit midweek, but then we heard this news of Saudi [Aramco] trying to buy [crude] from SOMO, and the market keeps on getting stronger and [looks] very expensive now," said a trader with a North Asian refiner.
Platts reported Wednesday that Saudi Arabia's state-owned oil company, Aramco, had approached Iraq's State Oil Marketing Organization for Basrah Light barrels, with market sources saying a request had been for 10 million barrels for October or November loadings.
One source, who spoke on condition of anonymity, told Platts that SOMO had not yet agreed to "comply" with this request as it has to meet its obligations with its term holders.
Saudi Aramco declined to comment.
Intermonth spreads for Dubai futures also strengthened Friday morning. The October/November spread was pegged at $1.55/b, near its six-year high of $1.59/b that the spread was assessed at earlier this week. The spread was assessed at $1.40/b Thursday at 4:30 pm (0830 GMT) in Singapore.
Similarly, the spread for November/December futures rose to $1.36/b Friday morning, whereas it was assessed at $1.23/b Thursday.
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