The spread between cash Dubai crude and same-month Dubai crude swaps flipped into backwardation Tuesday for the first time since August 31, on the back of strong demand from Asian refiners returning from seasonal turnarounds.
Platts market data showed the spread between cash Dubai versus same-month Dubai swaps at a premium of 20 cents/b Tuesday, the highest since August 31 when it was assessed at a premium of 64 cents/b.
The build-up to backwardation on Tuesday was seen as continuing the strength seen in April, when the spread between cash Dubai versus same-month Dubai swaps averaged at minus 35 cents/b, up from minus $1.31/b in March.
The Dubai crude market structure has strengthened on concerns of tighter supplies amid a pick-up in demand from refineries expected to return from seasonal turnarounds, traders have said.
The strength in Dubai drew first-time seller Mitsui to trade a partial of July-loading Dubai crude with Shell in the Platts Market on Close assessment process Tuesday.
Shell traded five partials at $43.00/b each by the end of the Platts MO -- one with Mitsui and the remainder with Chinaoil.
Stronger Dubai crude prices have also resulted in the narrowing of its spread to Oman crude to the lowest in three months.
Platts on Tuesday assessed front-month June cash Oman at parity with front-month cash Dubai prices.
The Oman-Dubai spread has narrowed since reaching a peak of $1.43/b on March 3.
