The benchmark cash Dubai crude premium to Dubai futures edged higher at the Asia market close on March 4, as the market awaits the outcome of the OPEC+ meeting later March 4, which is expected to be pivotal in shaping the trading cycle for May-loading cargoes.
S&P Global Platts assessed May cash Dubai at a premium of $1/b to the same-month Dubai futures at the 4.30pm Singapore close on March 4, ticking up by 4 cents/b from the close on March 3.
May cash Oman crude was also valued at a premium of $1/b to same-month Dubai futures, up by 4 cents/b from the close on the previous day.
Opinions range widely regarding the extent of rollback in production cuts for April that will be discussed in the OPEC+ meeting later during the day on March 4, keeping market participants on their toes and activity levels in the physical market sluggish.
Some expect a rollback of Saudi Arabia's unilateral cuts, as well as the wider OPEC+ group's negotiated cuts, amid strong outright prices that incentivize producers to increase output.
However, others argue that a gradual rollback of cuts would better suit the alliance's aim of maintaining stability in the market as demand recovery remains tenuous.
"This round is seeing a lot of indecisiveness even from the Saudis themselves," said one trader based in Singapore. "The unilateral 1 million b/d cuts won't be fully [rolled back] as the structure now has priced in minimum rollback. If they do so, the flat price may react and collapse."
The production policy is expected to have knock-on effects on demand patterns in the market, as a collapse in prices may bring back demand from China's teapot refineries.
"At this flat price, teapot refineries are not big buyers as their margins are suppressed. If the flat price lowers, they can increase run rates and absorb excess cargoes, balancing the market," said another trader based in Singapore.
The S&P Global Platts Market on Close assessment process on March 4 saw a total of 15 partials of 25,000 barrels each traded, consisting of 14 May Dubai partials and one May Oman partial.
The Dubai partials were traded with Shell, Total, Reliance, Hengli, Unipec and Vitol on the sell side and PetroChina, Trafigura, Gunvor and Unipec on the buy side. The Oman partial was traded with Unipec on the sell side and PetroChina on the buy side.
