Dubai crude slumps 11% on week in sharpest drop since March

9 Dec 2022

Quantum Commodity Intelligence - Middle East benchmark Dubai crude posted the steepest weekly losses since March as economic headwinds took hold of sentiment, while the output rollover from OPEC+ did little to calm market nerves.

Quantum assessed front month Dubai cash for February delivery at $72.05/b in the week ending 9 December, versus $81.00/b for the same contract last Friday, down 11.05%.

Crude prices initially traded higher when markets reopened after Sunday's OPEC+ meeting, but the rally proved short-lived as markets took a distinct downturn on growing fears that weak economic growth would have a detrimental impact on oil demand next year.

Crude prices also wobbled after Saudi Aramco announced sharp cuts to its OSPs for January-loading crude to Asia, which although largely in line with expectations, were seen by some analysts as an indicator of sluggish demand.

Several recessionary warnings also came during the week, including Goldman Sachs CEO David Solomon warning "economic growth is slowing," while JPMorgan's CEO Jamie Dimon flagged the possibility of a "mild to hard" recession.

A further relaxation of Covid restrictions in China and disruptions to Russian exports via Turkey did little to stem the retreat, although prices were showing some signs of stabilizing by the end of the week.


The prompt Dubai market structure remained under strong downward pressure as the M1/M3 Dubai spread (Feb23/Apr23) hovered around the yearly low of $1/b, while the one-year curve crunched to a 2022 low of $1.70/b on Friday.   

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

ICE Brent futures for Feb23 were priced at $76.28/b at the Asia close Friday (1630 Singapore), down $10.22/b on the week, or 11.8%, while the Feb23 Brent/Dubai cash spread narrowed over $1/b to $4.25/b.

DME Oman futures at 1630 Singapore time were 11.25% lower at $71.99/b for the Feb23 contract, largely shadowing cash Dubai over the past week.

Light sweet Murban crude futures trading on Abu Dhabi's IFAD Exchange retreated 12% to close the Singapore week at $75.04/b for the Feb23 contract, as the flagship Adnoc grade faced stiff competition from discounted Russian barrels, including ESPO and Sokol.