Mideast crude market jumps on robust Asia demand – Nasdaq


Reuters






By Florence Tan

SINGAPORE, Aug 10 (Reuters) – The Middle East crude market jumped on Thursday with spot October cargoes trading at premiums at more than one-year highs on robust demand in Asia, trade sources said on Thursday.

Strong refining margins, Saudi supply cuts and reduced arbitrage flows to the east have boosted demand for Middle East crude in Asia.

Spot premiums for light crude produced in Qatar and Abu Dhabi touched their highest in more than a year, buoyed by strong demand from Japan.

Japanese refiner Fuji Oil has bought four cargoes to load in October, double the volume from the previous month, probably to prepare for peak winter demand ahead, one of the sources said.

These include two cargoes of Murban at 30 to 35 cents a barrel above its official selling price and two cargoes of Qatar Land at premiums of 35 cents to just over 40 cents a barrel to its OSP, the sources said.

BACKWARDATION

Middle East crude benchmark Dubai was further supported by Brent’s strength after the European marker’s price spreads for the first three months flipped into backwardation for the first time in more than three years.

Dubai followed, with intermonth spreads for September to December at 1-3 cents in backwardation.

In a backwardated market, prompt oil is more expensive than supply in future months.

DME Oman, another Middle East crude benchmark, was priced at a premium to Dubai swaps for the first time in four months, industry data showed.

Strong Asia’s refining margins, boosted by peak summer demand and refinery outages, and the start-up of new refining capacities in China continue to underpin Asia’s crude appetite.

In the first 10 days this month, a complex refinery in Singapore earned a profit of more than $7 for every barrel of Dubai crude it processes.

Supply also tightened with Saudi cuts and limited opportunities to ship Atlantic Basin crude to Asia after the spread between Brent and Dubai widened.

Earlier this week, Saudi Arabia cut term supplies to some customers in Asia for the first time as it makes good on its pledge to help rein in a global supply glut.














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