Bloomberg News

Dubai Timespreads at Lowest in Almost Two Weeks; SK Sells Dubai

February 07, 2012

Feb. 7 (Bloomberg) -- Dubai crude timespreads fell to their level lowest in almost two weeks as refinery margins slid.

Dubai crude’s backwardation, when the price for deliveries now is greater than for shipments later, narrowed by 10 cents. Swaps for March were priced 78 cents a barrel more than May, the lowest since Jan. 25, according to PVM Oil Associates Ltd., a London-based broker. The price difference, known as the timespread, has fallen 23 percent this month, a sign that demand from refiners is declining.

The profit for refiners in Singapore capable of upgrading fuel oil into gasoline and diesel, a process known as cracking, was $6.49 today for Dubai crude, compared with $7.23 on Jan. 30, according to data compiled by Bloomberg.

Oman futures for April delivery rose 16 cents to $114.61 a barrel on the Dubai Mercantile Exchange at 4:38 p.m. Singapore time with 2,505 contracts traded. The settlement price was $114.61 at 12:30 p.m. in Dubai.

The March Brent-Dubai exchange for swaps, which measures the European benchmark contract against the Persian Gulf grade, was unchanged at $2.85 a barrel, according to data from PVM Oil Associates Ltd. The April exchange for swaps 1 cent to $2.98.

Middle East crude price assessments were unchanged. Abu Dhabi’s Murban remained 5 cents below its official selling prices, while Qatar Land was pegged 15 cents below its own OSP.

The market is awaiting allocations from Saudi Arabia for crude to be loaded from the Middle East producer in March. The world’s largest exporter provided full contracted volumes in February, the 27th month in a row. Abu Dhabi National Oil Co. will provided long-term buyers in March with full volumes, according to buyers at three refiners in Asia who were notified by Adnoc and who declined to be identified, citing company policy.

Dubai Partials

One deal was completed in the Dubai partials market, according to a survey of traders who monitor and participate in the Platts pricing window. South Korea’s SK Innovation Co. sold a 25,000 barrel lot to Trafigura Beheer BV at $113.30 a barrel.

China International United Petroleum & Chemical Co., or Unipec, was the confirmed buyer of a 100,000 metric-ton cargo of East Siberian Pacific Ocean crude from OAO Rosneft, according to three traders who participate in the market, declining to be identified because the information is confidential. Rosneft sold the ESPO cargo, for March 27 to March 30 loading, at $6 a barrel above regional benchmark Dubai prices.

--Editors: Christian Schmollinger, Mike Anderson

To contact the reporter on this story: Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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