Backwardation steepens; supply largely cleared
Brent/Dubai EFS rises holding off arbitrage flows
The Dubai swaps backwardation steepened and Brent/Dubai EFS rose at the Asia opening Dec. 23, with the spot supply of sour crude grades heard to be largely cleared for the February-loading cycle, while arbitrage flows remained thin.
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At 11 am in Singapore (0300 GMT), the January-February Dubai swaps spread was pegged at 58 cents/b, up 3 cents/b from the Asian close on Dec. 22, S&P Global Platts data showed. The February-March Dubai swaps spread was pegged at 40 cents/b, rising 7 cents/b from the Asian close on the previous day, the data showed.
Spot supply of sour crude grades is heard to be largely cleared, according to market sources, while most end-users have also met their procurement requirements.
Spot trading levels for Dubai-linked sour crudes such as Russia’s ESPO are heard to be trending higher amid tightening spot supply availability, with the wider Brent/Dubai EFS stemming flows of arbitrage grades, sources said.
“Yes, [arbitrage grades] not likely to come East for now,” said a crude oil trader based in Singapore.
At 11 am in Singapore (0300 GMT), the February Brent/Dubai EFS was pegged at $2.63/b, up 8 cents/b from the Asian close on Dec. 22, Platts data showed.
Initial talks indicated that Russia’s Surgutneftegaz and Gazprom each awarded a tender closing Dec. 22 offering February-loading barrels of ESPO crude at premiums around $3.30/b-$3.50/b, FOB, higher than traded levels of $2.80/b-$3.20/b heard earlier in the month.
“Seems to be healthy demand,” said the trader in reference to the strengthening spot premiums for ESPO crude, adding: “This month is [clearing] surprisingly fast.”