DUBAI FUTURES: Intermonth spreads rise as spot supply clears – S&P Global

Highlights

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.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

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.”