Benchmark Dubai crude futures intermonth spreads were mostly steady at noon in Asia Sept. 1 after rising at the Asian close on Aug. 31 as sentiment was lifted by news of tighter crude oil supply from Abu Dhabi.
At 12 pm in Singapore (0400 GMT), the October/November Dubai crude futures spread was pegged at a contango of 13 cents/b, just a cent lower than the 12 cents/b contango assessed at the 4:30 pm close (0830 GMT) on Aug. 31, Platts data showed.
The November/December spread was pegged at 15 cents/b contango at noon Sept. 1, also a cent lower than the 14 cents/b contango assessed at the Asian close on Aug. 31.
The intermonth spreads surged on Aug. 31 after Abu Dhabi National Oil Co. informed its term customers that it will cut the volume available for export over October by 30% for all of its four crude oil grades.
The cuts are deeper than the 5% cut in the previous three months, Platts data showed.
The announcement, which was made on the last trading day for the October-loading cycle, lifted sentiment on the physical Middle East sour crude market.
Front month cash Dubai spread against same-month Dubai futures -- a proxy of spot market sentiment for Middle East sour crudes in Asia -- rose to a one-month high of minus 14 cents/b on Aug. 31, Platts data showed.
Similarly, front month cash Oman versus same-month Dubai futures spread rallied to over a month-high premium of 70 cents/b on Aug. 31. The spread was last higher on July 22 when it was assessed at 78 cents/b, Platts data showed.
However, it remains to be seen if the bullish sentiment could sustain going into the new November-loading trading cycle in September as fragile refining margins could continue to cap demand, traders said.
The expected release of official selling prices from Middle East producers in the coming days could also provide further cues on market direction this month, they added.
"In theory [after ADNOC announced the supply cuts], they may not cut [their OSPs] much or not at all. But I think ADNOC should cut to give more incentive for refineries to run," a Southeast Asian crude trader said.
Market participants surveyed by Platts last week indicated that they expected ADNOC to cut their October OSP differentials by a range of between 80 cents-$1.20/b, while Saudi Aramco could cut their OSP differentials of Asia-bound crude by $1-$2/b.
