Benchmark Dubai crude spreads firmed slightly in mid-morning trading hours in Asia Monday, as market participants juggled an initially weak demand outlook with a possible pickup in buying appetite for September-loading crude cargoes, they told S&P Global Platts.
At 11:00 am in Singapore (0300 GMT), September cash Dubai crude's premium to September futures ticked up to $1.14/b, compared with $1.09/b assessed at the close of trading in Asia on Friday.
A revival in product margins ahead of autumn maintenance season could see refiners rush to secure a few extra cargoes this month, traders said.
September cash Dubai's premium to futures -- which had narrowed past $1/b backwardation at the beginning of July, initially led market participants to expect a weaker outlook this month. The premium had averaged a backwardation of $2/b over June.
The spread between the prompt Dubai physical and same-month futures is often tracked as a proxy of demand for physical cargoes of Middle East crude oil in the spot market.
Traders also pointed to a surge in Oman's premium over Dubai futures as an indicator of demand revival for the medium-heavy sour crude.
September cash Oman's premium to September Dubai futures widened to $1.63/b at the close of trading in Asia on Friday, after slipping to as low as $1.04/b on July 2.
At 11:00 am in Singapore Monday morning, it was firmer, at $1.68/b, and has averaged $1.31/b so far this month.
A pickup in Dubai and Oman premiums could signal potential support for spot market differentials of other Middle East sour crudes, crude traders said.
So far, market participants have expected that light and medium sour crude barrels will likely trade in "deep discounts" due to a weak demand outlook and higher-than-expected official selling prices from producers like Abu Dhabi National Oil Company and Saudi Aramco.
Both released their respective OSPs last week. ADNOC raised the premium of its flagship light sour Murban crude by 6 cents/b from the previous month, and Aramco cutting its Arab Light OSP by 25 cents/b instead of the expected 35 cents/b.
Traders said these were relatively high levels and that spot differentials could take a hit as a result.
Meanwhile, the sour crude market in Asia is still awaiting OSPs from the likes of Kuwait, Iraq and Iran for the current cycle.
Platts assessed September cash Dubai at $61.60/b on Friday. September cash Oman was assessed at $62.14/b.
