Dubai futures: EFS narrows on strengthening Middle East crude demand in Asia

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Benchmark Dubai future’s discount to narrowed in mid-morning in Tuesday as for Middle East sour crudes began picking up for January.

At 11 am in Singapore (0300 GMT), the January Brent/Dubai Exchange Futures for Swaps spread or EFS was notionally pegged at $3.48/b, down from $3.63/b assessed at the close of trading in Asia Monday.

The EFS is used by crude traders as an indicator of the premium of Brent-linked low sulfur crudes over Dubai-linked high sulfur grades. A narrower EFS indicates a stronger high sulfur crude complex.

Crude traders in Asia expect high sulfur, or sour crude grades originating from the Persian , as well as ’s ESPO — which is priced off Platts front-month Dubai crude assessments — to fetch premiums in spot market trading this month. The market is trading cargoes loading in January over November.

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Dubai intermonth spreads, which typically move down if the EFS narrows to adjust for the additional strength in sour crude pricing, actually strengthened overnight, adding to bullish momentum for Dubai-linked grades.

The December/January Dubai futures spread was pegged at $1.31/b at 11 am in Singapore Tuesday, after being assessed at $1.27/b at 4:30 pm (0830 GMT) at Monday’s close in Asia.

Similarly, the January/February spread tracked up to 89 cents/b backwardation Tuesday morning, after being assessed at 85 cents/b Monday.

Spot market activity kicked off Monday with the release of two tenders by India’s IOC, both seeking a variety of crude grades. One tender stipulates that the awarded grades will be priced against Platts Dated assessments, while the other is seeking a variety of sour crudes from the Middle East as well as the US, to be priced against Platts front-month Dubai crude assessments.

Both tenders close Thursday, November 14.

— Eesha Muneeb, eesha.muneeb@spglobal.com

— Edited by Wendy , wendy.@spglobal.com

Source: Platts

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