The spread between ICE Brent and Dubai futures narrowed for the first quarter of 2020 in mid-morning trading hours in Asia on Friday as outlook for medium sour crude showed further tightening of global supplies expected over January to March next year.
January ICE Brent/Dubai Exchange Futures for Swaps was notionally pegged at $3.14/b at 11 am in Singapore (0300 GMT) on Friday, up a few notches from $3.09/b assessed at the close of trading in Asia on Thursday.
However, the EFS for Month 2 (February) and Month 3 (March) narrowed Friday morning, with March EFS dropping below $3/b and pulling down the Q1 average from $3.12/b Thursday evening to $3.04/b on Friday morning.
February EFS was pegged at $3.01/b Friday, down from $3.12/b, while March EFS dropped to $2.98/b at 11 am compared with $3.15/b assessed at 4:30 pm in Singapore (0830 GMT) on Thursday.
Crude traders said tighter Urals supply was exacerbating an already short market for medium sour barrels globally, and the situation did not look like it would be resolved in the short term.
"Looks pretty tight for medium sour -- mostly driven by Russians taking as much crude as they can into their system and exporting straight run fuel oil to the US Gulf Coast and other regions," said one trader with a refiner based in Asia.
"That combined with already nonexistent Venezuela and Iran supply is making things very tight," the trader added.
Intermonth spreads for Dubai futures traded within a familiar range as they have for most of the week. Friday morning's notional pegs saw the December/January spread at $1.41/b at 11 am, compared to $1.46/b assessed on Thursday.
The January/February Dubai futures spread ticked down to 94 cents/b on Friday from 95 cents/b assessed on Thursday.
