CRUDE MOC: Platts August cash Dubai crude averages $40.791/b in June

Highlights

Platts August cash Oman averages $40.844/b in June

Dubai cash/futures spread averages 84 cents/b premium over June

Dubai spread rises to five-month high of 84 cents/b premium in June

Singapore
The S&P Global Platts cash assessment for front-month August cash Dubai crude settled at $42.05/b on June 30, the last day for the August-loading trading cycle.

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For the whole of June, the front-month cash Dubai assessment averaged $40.791/b, up $10.324/b from May, S&P Global Platts data showed.

August cash Oman crude settled at $42.10/b, bringing the average for June to $40.844/b, or up $10.093/b from May.

June cash Dubai’s discount to the Oman assessment averaged 5.3 cents/b in June, narrowing from 28.4 cents/b in May.

The outright prices for cash Dubai and cash Oman were up 33.9% and 32.8%, respectively, from the May average as sentiment was boosted by the OPEC+ extension of the deeper production cut of 9.6 million b/d to July.

The alliance has also increased pressure on Angola, Iraq, Kazakhstan and Nigeria to comply with the deal, with their compensatory cuts expected to be made over July-September in addition to their set quotas.

Similarly, supply-side factors amid a slight uptick in demand have supported the spread between the August cash Dubai and same-month Dubai futures from discounts in May to premiums in June — the highest since January.

The Dubai cash/futures spread, closely tracked by Middle East crude traders for cues about spot market sentiment, rose $3.57/b from an average of minus $2.73/b over May to a premium of 84 cents/b for the whole of June. The spread was last higher in January when it averaged at a $2.11/b, Platts data showed.

Five convergence cargoes declared

Meanwhile, the Platts MOC assessment process on June 30 saw a total of 109 25,000-barrel partials traded, consisting of 83 August Dubai partials and 26 August Oman partials, up from 42 partials that traded for the whole of May.

Five convergence cargoes were declared on the MOC on June 30, four of which — consisting two Abu Dhabi’s Upper Zakum cargoes and two Qatar’s Al-Shaheen cargoes — were declared into the Dubai partials mechanism and a single Murban crude cargo declared into the Oman partials mechanism.

A convergence occurs when 20 partials are traded between two counterparties, resulting in a full 500,000 barrel physical cargo being declared from the seller to the buyer.

For Dubai partials, the seller has the option to deliver a Dubai, Oman, Upper Zakum, Al-Shaheen or, with a quality premium, Murban cargo to the buyer.

During the MOC process on June 30, China’s Hengli Petrochemical declared two Al-Shaheen crude cargoes to Vitol upon convergence of two sets of 20 Dubai partials. Russia’s Lukoil and PetroChina each declared a cargo of Upper Zakum crude to Vitol upon convergence of 20 Dubai partials respectively with the Western trading house.

India’s Reliance, meanwhile, declared a cargo of Oman crude to Vitol upon convergence of 20 Oman partials. For Oman partials, the seller has the option to deliver Oman, or, with a quality premium, a Murban cargo to the buyer.

In total, 202 August partials traded on the Platts MOC process in June, consisting of 160 Dubai partials and 42 Oman partials.

In addition, a total of five full-sized crude cargoes traded on the MOC cargo platform for Asian crude markets in June, consisting of four 500,000-barrel cargoes of August-loading Upper Zakum crude and one 500,000-barrel cargo of August-loading Murban crude.

China’s Unipec was seen purchasing a 500,000 barrel cargo of Upper Zakum, for loading August 1-25, from seller Singapore-based EXTAP (ExxonMobil Trading Asia Pacific) during the MOC process on June 30. This is its second cargo purchase of Upper Zakum from the oil major this month.

Japan’s Mitsui had also picked up two full cargoes of Upper Zakum crude from the oil major, while Western trading house Mercuria purchased a full cargo of Murban crude from France’s Total during the cargo MOC process in June.

Physical cargoes traded on the spot market in Asia are often tracked by producers for cues about market sentiment when making price setting decisions for upcoming cycles.

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