Murban rally continues, hits Brent parity on product cracks, firm EFS

3 Nov 2021

Quantum Commodity Intelligence - Abu Dhabi's flagship Murban crude futures contract has surged to fresh highs versus Brent and Middle East sour benchmarks on firm light-ends and distillate cracks, while expensive arbitrage economics have boosted values for Asian grades.

Murban briefly topped Brent on Tuesday and was trading at parity Wednesday, with both grades at around $83.20/b at the 1230pm Dubai time (430pm Singapore) minute marker, according to data from ICE.

By contrast, sour crude grades with a higher cut of residual fuel have been hampered by tumbling high sulfur fuel oil cracks, but the overall tight supply/demand balance and steep Brent/Dubai EFS has underpinned all East of Suez crude oil grades.

Although historically Murban has regularly traded at premiums to Brent, this is the first time since IFAD launched in March that the Middle East light sweet marker grade has reached parity with its North Sea counterpart.

In addition to healthy light-end and distillate margins, Murban has also been buoyed by the soaring Brent/Dubai EFS, which on Tuesday reached an eight-year high of around $5.40/b, making competing arbitrage barrels from West Africa, the US, and the North Sea expensive options for Asian refiners.

On a Dubai swaps basis, Murban was valued by Quantum at a premium of around $5.30/b for January barrels pricing against January Dubai, also a multi-year high.

At around 40.0 degrees API gravity and 0.7% sulfur, the grade yields a high percentage of gasoline and distillates, which have rocketed above pre-pandemic levels in recent weeks both in terms of outright values and premiums to crude.