Middle East oil benchmark Dubai sank to the lowest in seven weeks on higher production from the Middle East and slowing seasonal demand.
Dubai was down $1.76 to $117.05 a barrel, the lowest since Feb. 21, according to data compiled by Bloomberg. The crude’s backwardation, when the price for delivery now is greater than that for later, dropped 10 cents. Swaps for May were $1.40 a barrel more than July, according to data PVM Oil Associates Ltd., a London-based broker. That price spread is down 17 percent so far this month and signals weakening demand from oil refiners for immediate shipments.
“It could be that momentum is changing and that market participants are beginning to notice the stock builds occurring on the back of ramped-up production out of the Middle East,” Vienna-based JBC Energy GmbH said in a research note today. “With Saudi storage facilities now full, the Kingdom’s barrels are entering the market directly and soaking up seasonally lower demand.”
Profits from turning a barrel of Dubai crude into fuel and products priced in Singapore averaged $3.13 during the last five days, according to data compiled by Bloomberg, compared with a $2.16 at for the same time period at the beginning of April and a mean of $2.47 during the last 30 days.
PT Pertamina (PERT), Indonesia’s state-owned oil company, bought two crude cargoes totaling nearly 1.6 million barrels for delivery in June from ConocoPhillips (COP:US) and Spain’s Repsol YPF SA (REP), according to three traders who participate in the market, who aren’t authorized to speak to the media. Pertamina bought 600,000 barrels of Libya’s Amna crude from ConocoPhillips for its Balikpapan refinery, and 950,000 barrels of Angola’s Girassol from Repsol for its Cilicap facility.
Japan’s Toyota Tsusho Corp. (8015) hasn’t renewed a contract with Iran for the supply of 5,000 barrels a day of crude, said two people with knowledge of the company’s purchases.
The contract was for supplies from April to March 2013, according to the people, who declined to be identified because the information is confidential. The trader still has another contract with Iran running from January to December for almost 40,000 barrels a day, according to one of the people. A company spokesman in Tokyo declined to comment on the contracts.
PV Oil Co., Vietnam’s state-owned oil-marketing company, is said to be offering two 250,000 barrel cargoes of Ruby for June 4 to June 10 and June 18 to June 24, according to two traders. The company is also selling two 200,000 barrel shipments of Rang Dong for June 1 to June 7 and June 22 to June 28, the traders said. Bids are due April 17.
Four Dubai partials for June were sold today, the first deals so far this month, according to a survey of traders who monitor the Platts pricing window. Morgan Stanley sold three of the 25,000 barrel lots. Vitol Group Plc bought two from the Wall Street bank at $116.75 and $116.90 a barrel, while Royal Dutch Shell Plc (RDSA) bought one at $116.90.
The May Brent-Dubai (PVMMDBSP) exchange for swaps, which measures the European marker grade’s premium against the Middle East oil, fell 31 cents to $3.57 a barrel, according to data from PVM. That was the biggest drop since March 9. The June EFS was down 21 cents to $3.77.
Oman for June delivery rose 35 cents to $117.15 a barrel on the Dubai Mercantile Exchange at 6:16 p.m. Singapore time with 2,033 contracts traded. It settled at $116.76 at 12:30 p.m. local time.
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