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Middle East crude futures spreads steady despite recovery in outright crude values

Middle East crude holds steady amid global risk-off sentiment

Singapore — Benchmark Dubai crude futures' spreads held firm in mid-morning trade in Asia Monday even as global crude oil prices pulled back on a subdued economic outlook for China and with Brexit-related news weighing on investors' minds over the weekend.

Brent's premium to Dubai dipped, strengthening the Middle East sour crude complex as a result, with the December Brent/Dubai Exchange Futures for Swaps spread narrowing to $2.58/b at 11 am (0300 GMT) Singapore time Monday.

The spread was last assessed at $2.78/b at 4:30 pm Singapore time (0830 GMT) Friday. A narrowing Brent/Dubai EFS will make Dubai-linked crude oil prices relatively more expensive compared to Brent.

A tighter EFS spread is typically followed by an equivalent adjustment in Dubai intermonth futures spreads to negate the strengthening effect on the Middle East crude complex.

However, Dubai futures spreads held steady Monday morning, with no EFS-linked weakening seen for the prompt M1/M2 and M2/M3 spreads.

November/December Dubai futures spread held steady at $1.02/b backwardation Monday morning, in line with Friday's assessment at the close of trading in Singapore.

The December/January intermonth spread for Dubai futures stood at 90 cents/b Monday morning after being assessed at 89 cents/b at 4:30 pm Singapore time Friday.

Global recessionary concerns dominated market sentiment at the start of the week, with China's GDP numbers adding to evidence of economic slowdown around the world, market participants said.

"Global risk sentiments were dented by China's disappointing Q3 GDP growth print of 6% year on year and warnings of a weak global growth prognosis at the IMF-World Bank annual meetings on Friday," OCBC Bank analysts said in a note Monday.

China's gross domestic product expanded 6% in Q3, the lowest level since 1992, according to media reports citing Chinese government bodies.

"Crude oil prices suffered after data showed that China's economic growth remained weak," ANZ analysts said in a note Monday.

"This weighed on an already gloomy mood after the weekly EIA [US Energy Information Administration] report earlier showed crude oil inventories rose 9.3 million barrels the previous week," they added.

The OCBC Bank analysts said: "Asian markets may be off to a shaky start this week as fluctuating optimism about US-China trade progress and Brexit extension hopes battle with weak economic data."

--Eesha Muneeb,

--Avantika Ramesh,

--Edited by Wendy Wells,