Dubai crude falls 3%, fourth consecutive weekly fall
Quantum Commodity Intelligence – Asian crude oil markets slumped for a fourth consecutive week, shrugging off relatively upbeat demand forecasts from OPEC and the IEA with focus turning to growing supplies and concerns over the broader economy.
But the retreat was largely sparked by the steep build in US crude oil stocks, with the knock-on effects felt across global benchmarks, wiping out modest early-week gains.
Quantum assessed front-month Dubai cash for January delivery at $79.25/b in the week ending 17 November versus $81.61/b for the same contract on 10 November, a fall of 2.9%.
Dubai has now lost nearly $13/b since the Q4 peak on 20 October.
Wednesday's delayed EIA report revealed US Crude stocks surged by 17.5 million barrels during the two weeks to 10 November, sending global oil prices spiralling downwards. US commercial inventories ballooned to 439.4 million barrels, the highest since early August, while US crude production was also holding at a record 13.2 million bpd.
The midweek losses neutralized gains from earlier, buoyed by consumption outlooks from the OPEC and IEA monthly reports. However, the IEA sees record output from the US, Brazil and Guyana underpinning this year's 1.7 million bpd in global oil supplies, while non-OPEC supply continues to lead growth of around 1.6 million bpd next year to a record 103.4 million bpd.
Markets were also given a brief lift after month-on-month US inflation was unchanged from September, while annual CPI eased to 3.2%, versus 3.7% the previous month.
Meanwhile, China continues to post mixed economic signals as retail sales, a measure of spending sentiment, jumped by 7.6% in October, a major improvement from the 5.5% annual growth in September.
However, this was offset by the beleaguered property sector, as figures revealed real estate as prices in major cities dropped for the fourth straight month in October. The 0.5% monthly decline was the steepest in nine years.
Premiums for physical barrels were again under pressure, although a slight upturn in refining margins helped steady things towards the back end of the week.
Key medium-sour tradeable grades, including Oman, Al Shaheen and Upper Zakum, were all valued in the Dubai swaps +$1.40-$1.50/b range on Friday, compared to around +$2/b at the start of the month and the lowest since July.
But it was Murban that grabbed the headlines this week, with the Dubai print set by lightest grade in the 'Dubai basket' for the first time since April.
This time last month, the Murban was around +$1.50/b over Oman and Upper Zakum, with a sluggish performance in gasoil cracks blamed for weakness in the distillate-rich Murban grade. In addition, the narrow Brent/Dubai EFS has opened the way for a flood of lighter barrels from the Atlantic Basin, providing stiff arbitrage competition for Murban.
The prompt Dubai structure also eased with the M1/M3 (Jan23/Mar24), which National Oil Companies use in OSP calculations, also narrowed to around +$1.50/b, which was down $0.50/b on the week for the same spread.
ICE Brent futures for Jan23 were valued at $77.56/b at the Asia close Friday (1630 Singapore), down 3.65% versus last week's Asia close.
The Brent selloff widened the Brent/Dubai cash spread for January to around -$1.70/b, while the Brent/Dubai EFS turned negative for only the second time this year.
DME Oman futures again largely shadowed Dubai over the week, valued at $79.18/b for Jan24, or down 2.95%.
Light-sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange were trading down 2.9% on the week at $79.18/b for the Jan24 contract.
In the tanker market, VLCC rates edged up with Middle East Gulf-Far East seen back above Worldscale 70, while brokers pegged long-haul US Gulf-Ningbo firmer at $10 million on a flat rate.