Strong demand from Asian end-users has lifted the cash differential for Abu Dhabi's Murban crude against the crude's official selling price to the highest in seven months, according to S&P Global Platts data.
Murban crude cargoes for November-loading were heard to have changed hands at premiums of between 40 cents/b and 45 cents/b to the grade's OSP, traders said. In comparison, Murban was heard traded at premiums of between 20 cents/b and 35 cents/b last month.
Platts last assessed Murban at a premium of 40 cents/b to its OSP on Monday, the highest since February 29, when it was assessed at a premium of 55 cents/b to its OSP.
Continued strength in product margins was supporting the light sour crude grade, traders said.
"Because of [heating demand] in winter and [the crude's] yield, Murban is better [value] for our refinery this month than Das," said a trader with a North Asian refinery, adding that Murban was also better value compared with other alternative grades such as the US' WTI.
"While the yield for WTI is better [than] Murban, we didn't take WTI because of [the] price and [delivery] timing," the trader added.
Platts data showed the second-month naphtha versus Dubai swap crack averaging at a premium of 64 cents/b in September to date, up 95 cents/b from minus 31 cents/b last month and the highest since November 2016, when it averaged at a premium of $1.13/b.
Similarly, second-month gasoil and jet fuel versus Dubai swap cracks have averaged at $14.11/b and $14.04/b in September to date, the highest since March and May 2015, respectively.
In comparison, the gasoil and jet fuel cracks averaged at $13.23/b and $12.98/b in August, respectively.
"On the sellers' side, they will be saying high cracks are supportive [and] Asian refineries are coming out of turnarounds. [Also there is a] perception that West African crudes are not coming across [to Asia] as much. Even though the EFS has come down from highs last month, it is still high," said a Singapore-based crude trader.
OFF 8-MONTH HIGH, BUT STILL FIRM
While the Brent/Dubai EFS has come down from an 8-month high of $2.13/b on August 22, it has still averaged at $1.70/b in September to date, up from an average of $1.57/b in August, and the highest since last December, when it was at $2.17/b, Platts data showed.
The Brent/Dubai EFS, a key indicator of ICE Brent's premium to benchmark cash Dubai, is a measure of the ease or opening of the arbitrage between Europe and Asia, as many European and African grades price off Dated Brent while many Middle Eastern and Asian grades price on a Dubai-related basis.
A wider EFS raises the value of Brent-linked crudes against Dubai, making the Dubai-linked crudes more attractive to buyers.
In addition, lower availability of Murban crude cargoes for November loading due to scheduled field maintenance in November and December could have also helped support the cash differentials for Murban, traders said.
"Talk is that Murban is tighter this month [due to the] field maintenance for Murban, [so] that would lift premiums for Murban," said a trader.
With demand still emerging for the grade, premiums for Murban crude could potentially rise further for November-loading cargoes, traders said.
"There are still tenders out there [for Middle East sour crudes so] some demand are still not covered," said a Middle East crude trader.
