Platts proposes amendment to Dubai partials MOC, cuts repeat order timing

Quantum Commodity Intelligence - Dubai crude oil benchmark publisher S&P Global Platts is proposing to shorten the time allowed for participants to repeat a bid or offer following a trade in the Middle East sour crude partials' Market On Close' assessment process, the company said Wednesday. 

The proposal, which comes into effect on 1 September, will shorten the time a participant has to bid on/offer on following a trade to 10 seconds, from the current 15 seconds.

Platts said the proposed change considers the growth in market activity and the recent price volatility, which has necessitated a "speedier and more granular approach" in the MOC process for price demonstration.

The change would apply to all crude partials and spreads in the Middle East MOC assessment process for Dubai, Oman, Upper Zakum, Al Shaheen, and Murban crudes.

The five grades are physically deliverable into the benchmark Platts Dubai crude contract, although a trade outside of Dubai partials is a rarity in practice.

Platts reduced repeat order timing in the Dubai MOC to 15 seconds from 60 seconds in November 2015. The change will not affect the increment guidelines, which allow market participants to improve their bid or offer by up to 5 cents/b every five seconds.

Window

Dubai partials are transacted in clips of 25,000 barrels that are traded during the so-called 'window,' with the price at 1630 Singapore setting that day's Dubai assessment.

According to Platts methodology, the "Dubai assessments reflect the repeatable, transactable price of Platts Dubai for the month of loading which are traded in lot sizes (partials) of 25,000 barrels, with physical convergence at 500,000 barrels, or 20 partials".

On convergence, the seller can declare one of the 'Dubai basket' grades, namely Dubai, Oman, Upper Zakum, Al Shaheen and Murban. The buyer is obliged to accept the nomination.

In practice, Upper Zakum and Oman are the two grades that are primarily nominated on convergence but occasionally supplemented by Dubai or Al Shaheen.

Murban set the Dubai assessment following the oil demand collapse in 2020, but this year the light sweet grade usually commands a premium of several dollars over its medium sour counterparts.

Dubai is the primary benchmark for pricing crude in the East of Suez region, along with DME Oman.