Dubai crude ends week 4% higher, Brent/Dubai spread soars

27 May 2022

Quantum Commodity Intelligence - Middle East crude oil finished the week ending 27 May comfortably higher, as global markets reacted to concerns of supply shortages, particularly on the products side, although benchmark Dubai lost further ground to Brent.

Front-month Dubai cash for July delivery was assessed by Quantum Friday at $112.35/b, versus $108.04/b on 20 May, up 3.98% and at a two-month high.

Dubai edged cautiously higher over the week but most of the gains came on Friday, after OPEC+ delegates said there would be no change in production policy when the group meets on 2 June.

Key OPEC+ producers, including Saudi Arabi and UAE, have reiterated that high crude prices have been caused by geopolitics and lack of refining capacity – an argument supported by huge refining margins across the globe.

The prompt Dubai structure held firm with the key M1/M3 (Jul22/Sep22) spread valued at close to +$5.50/b, flagging higher Official Selling Prices in July. The one-year curve also improved to around $20.60/b.

ICE Brent futures for Jul22 were assessed at $117.81/b at the Singapore close Friday (1630pm), up $6.18/b on the week, or over 6%, widening the Brent/Dubai cash spread for July to around $5.45/b versus $3.60/b a week earlier.

The July Brent/Dubai EFS widened almost $2/b to $10.90/b, the highest in two months.

DME Oman futures closed the week 3.76% higher at $112.27/b for the Jul22 contract, largely trading at parity to cash Dubai.

Light sweet Murban crude trading on Abu Dhabi’s IFAD exchange was the week’s laggard, closing up 3.14% at $113.86/b and nearly $4/b under Brent. The strength of the distillate and gasoline markets underpinning light grades has been somewhat offset by the collapse in naphtha cracks.