Dubai crude posts weekly gain, structure under pressure    

2 Dec 2022

Quantum Commodity Intelligence - Middle East benchmark Dubai crude posted a weekly gain for the first time in a month as prices rebounded on expectations of firmer demand from China, while an expected output rollover from OPEC+ was enough to steady markets.

Front-month Dubai cash for February delivery was assessed by Quantum at $81.00/b in the week ending 2 December, versus $79.60/b for the same contract last Friday, up 1.76%.

The week had stared on a sour note as the deteriorating Covid situation in China continued to drag on oil markets, while renewed reports that OPEC+ was considering a production hike sent pricing tumbling to a yearly low $76.65/b on Monday.

However, sentiment quickly reversed as media briefings from OPEC+ delegates dismissed talk of an output hike and even hinted at a reduction. At the same time, Adnoc notified some Asia-based customers it will cut December crude term volumes by 5%.

Additionally, China signalled a shift in its Covid stance as it moves to ease some virus restrictions, helping to underpin the oil price rebound during the second half of the week.  


However, the prompt Dubai market structure remained under strong downward pressure as the M1/M3 Dubai spread (Feb23/Apr23) was valued close to the yearly low at $1.05/b, a sign of sluggish spot demand.  

Premiums for flagship medium sour grades, including Oman, Upper Zakum and Al Shaheen, were also at around the lowest levels of the year, with buying interest heard at Dubai swaps +$1/b for February cargoes.

ICE Brent futures for Feb23 were priced at $86.50/b at the Asia close Friday (1630 Singapore), up a relatively modest $0.75/b on the week, or 0.73%, while the Feb23 Brent/Dubai cash spread narrowed nearly $1/b to $5.50/b.

DME Oman futures at 1630 Singapore time were 1.7% higher at $79.72/b for the Jan23 contract, largely tracking cash Dubai.

Light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange were the strongest performer, gaining 2.65% to close the Singapore week at $85.29/b for the Feb23 contract, as soaring freight costs continued to inflate the cost of competing Atlantic Basin crudes for Asian refiners.