Dubai crude softens on week but Q3 physical demand seen healthy

13 May 2022

Quantum Commodity Intelligence - Dubai crude oil finished the week ending 13 May slightly lower, as Asian markets tracked the volatility from Europe and broader conflicting price signals.

Front-month Dubai cash for July delivery was assessed by Quantum Friday at $106.65/b, versus $107.80/b on 6 May, down 1.07%.

Outright price movements were largely dominated by headline news over the EU’s proposed phase-out of Russian oil by year-end. Thursday’s IEA and OPEC reports sent further conflicting signals over the market outlook for the rest of the year.

The prompt Dubai structure was little changed over the past week as the key M1/M3 (Jul22/Sep22) spread, used by NOCs in OSP calculations, was just $0.15/b higher on the week at $5.20/b, while the one-year curve eased by around $0.30/b to $17.50/b.

Traders said demand for July spot barrels was underpinned by Asian refiners gearing up for a potential refined products’ crunch later in the year, while arbitrage opportunities for Middle East barrels moving West are also set to increase.  

ICE Brent futures for Jun22 were assessed at $109.59/b on the early Singapore close Friday (1230pm), down by $2.17/b on the week, narrowing the Brent/Dubai cash spread for July to just under $3/b, compared with $4/b last Friday.

The July Brent/Dubai EFS eased from last week’s five-week high of $9/b to around $8/b.

DME Oman futures closed the week 2.5% lower at $105.15/b for the Jul22 contract, with futures contracts timestamped at the regular 1603 Singapore close, but on a like-for-like basis DME was pegged around parity to cash Dubai.

Light sweet Murban crude trading on Abu Dhabi’s IFAD exchange closed Friday at $107.63/b, down 2.75% on the week and valuing Jul22 Murban at around $0.50/b under Brent.