Benchmark Dubai crude futures intermonth spreads continued to show signs of narrowing in mid-morning trade in Asia July 7 amid lukewarm demand expectations after Saudi Arabia raised its official selling prices for August.
At 11 am in Singapore (0300 GMT), the August/September Dubai crude futures spread was pegged at a 16-cent/b backwardation, narrowing 3 cents/b from the Asian close the day before, S&P Global Platts data showed. The September/October spread was pegged at a 3-cent/b backwardation, narrowing 2 cents/b from the Asian close on July 6.
Expectations of producer price hikes capping demand recovery have resulted in slightly weaker intermonth spreads in recent days.
Saudi Arabia raised its August official selling price for term crude supplies to Asia by $1/b for all grades on July 6, a move that was widely expected by market participants.
Any further increase would further hamper demand recovery against a backdrop of persistently poor refining margins, trade sources said.
"Margins are too bad, refiners all running low run rates," a crude oil trader said.
The market is awaiting the release of fresh OSPs from other Middle Eastern producers following Aramco's release on July 6.
Aramco set the August Asia OSP for Arab Light, Arab Extra Light and Arab Medium at a premium of $1.20/b to the Dubai/Oman average.
Its August Asia Arab Super Light OSP was set at a $2.65/b premium to Dubai/Oman, while the Arab Heavy OSP was set at 90 cent/b premium to the Dubai/Oman average.
