DME Oman crude oil revisits parity to global ICE Brent benchmark

      Published on Sunday, 25 November , 2018      213 Views     
DME Oman crude oil revisits parity to global ICE Brent benchmark


The DME Oman January futures contract was pegged at the same level as January ICE Brent crude oil futures at the close of trading in Asia on Thursday, as end-month volatility and record product margins narrowed the spread between sweet and sour crude benchmarks.



The Oman marker price published by the Dubai Mercantile Exchange at 4:30 pm Singapore time (0830 GMT) on Thursday was $63.03/b.

At the same time, the January ICE Brent futures contract was seen bid at $63.02/b and offered at $63.04/b on the Intercontinental Exchange’s trading screen.

“[DME Oman] was strong today,” said a crude oil trader in Singapore.

Market sources in Asia attributed the spike in the price of the sour crude grade to low liquidity on the DME coupled with end-month covering activity.

Traders said they typically see price volatility on the DME resulting from position covering every month.

Talk in the market also pointed to record-high fuel oil product margins that have kept prices for sour (high sulfur) crude grades — typically valued at discounts to lower sulfur alternatives — relatively well supported amid the recent downturn in global crude oil prices.

Oman and Dubai are higher sulfur, sourer crude grades compared to Brent, which is typically considered a premium crude grade due to its lower sulfur content and higher yield of more attractive refined products.

But margins for heavier, bottom-of-the-barrel products such as fuel oil have surpassed lighter yields such as naphtha and gasoline of late, as global product inventories tighten, said market sources.

The front-month December Singapore 180 CST HSFO swap crack against Dubai swaps hit an all-time of $4.61/b this week on November 20, S&P Global Platts data shows. The December 380 CST swap crack against Dubai swaps also hit an all-time of $3.94/b on the same day.

Meanwhile, ICE January Brent crude futures settled at a nine-month low of $62.53/b Tuesday this week, erasing a climb of around $20/b in just a month as investors remained concerned over weak demand and oversupply.

Platts Oman was assessed at $62.79/b, 24 cents/b under Brent and a 96 cents/b premium to January cash Dubai crude, which was assessed at $62.45/b as of 4:30 pm Singapore time on Thursday.

DME Oman briefly sat at a premium to ICE Brent crude futures recently.



The 4:30 pm market price for Oman crude settled higher than the Brent benchmark for four days in a row from September 25 to 28, reaching as high as $6.79/b over the global crude oil benchmark at one point.

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Category Business | 2018/11/25 latest update at 11:40 PM
Source : Internet | Photocredit : Google
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