November 18, 2011 / 11:45 AM / 8 years ago

Middle East Crude-Oman rises above Brent

SINGAPORE, Nov 18 (Reuters) - The Middle East crude market was mixed on Friday as unsold Murban and Basra Light cargoes weighed on sentiment even as DME Oman strengthened above Brent in an unusual move.

Regular Murban buyer Kenya likely skipped purchases this month, a move that will depress the light sour grade, a trader said.

* OMAN

- Oman crude futures settled on Friday 20 cents a barrel above better quality European Brent crude, in a rare move for the Middle Eastern grade.

Asia’s strong demand for Middle Eastern grades pushed up values while a worsening debt crisis in Europe depressed the European marker, industry sources said.

January Oman fell $2.13 to settle at $109.11 a barrel while ICE Brent’s 1-minute marker was at $108.91 at 0430 GMT.

“The Brent-Dubai EFS is narrowing and Middle East grades have been firm for some months now,” a Middle East crude trader said.

Dubai rose this month as Shell snapped up partial cargoes on the Platts window and this could have a roll-on effect on better quality Oman, traders said.

* TRADES

- Shell bought three Dubai partials, two from Phibro at $108.95 a barrel and one from SK Energy at $109.10. This brings its total Dubai partials purchase to 32 this month.

*OMAN ASSESSMENTS

- January Oman traded on the DME was up at a premium of $3.45 to Dubai swap quotes at 0830 GMT, using the settlement price for DME futures, the ICE one-minute marker for Singapore and the Brent-Dubai EFS as calculated by Reuters.

*EFS

- Brent crude’s premium to the Middle East marker Dubai fell on Friday to an 11-month low as a worsening debt crisis depressed the demand outlook in Europe.

The Brent/Dubai Exchange of Futures for Swaps (EFS) DUB-EFS-1M for January fell 5 cents from Thursday to $3.25 a barrel, lowest since $3.13 on Dec. 22, 2010, Reuters data showed.

The prompt inter-month spread for Brent LCOc1-LCOc2 which has been backwardated for the past three months, narrowed to less than 20 cents a barrel on Friday. Similarly, the January/February Dubai spread DUB-DUB2-S narrowed 15 cents to 37 cents a barrel in backwardation, Reuters data showed.

- For a graphic of the Brent/Dubai EFS curve, click here:

here

*MARKET NEWS

- China is likely to lift a total of up to 500,000 barrels per day of crude oil next year from Iraq, the fastest-growing oil producer in the Middle East, a volume nearly 50 percent more than this year, Chinese traders said.

The volume includes estimated equity oil secured through mega service contracts that PetroChina and CNOOC Ltd entered in 2009 and 2010 in Iraqi oil auctions after the removal of the Saddam Hussain regime.

At 500,000 bpd, or roughly one-tenth of China’s total crude imports, the volume would rank Iraq’s just next to Iran, which is now China’s third-largest crude supplier.

- OPEC officials are considering estimates that demand for the group’s crude oil in 2012 could average 1 million barrels per day (bpd) less than their current output, suggesting it may start to look at trimming supply.

- The hottest oil spread of the year, Brent versus U.S. crude, is bracing for months of volatility as investors put polar bets on the outlook for the U.S. and European oil markets and use the trade as a proxy for short-term speculation on the regions’ economies.

- A South Sudanese oil official ruled out Glencore marketing the new African country’s crude, effectively quashing an earlier deal the trading giant said it had signed to sell the nation’s oil.

- China Petroleum & Chemical Corp (Sinopec) and Kuwait Petroleum Corp on Friday started building their joint refining and petrochemical complex in the southern Chinese province of Guangdong, the top Chinese oil refiner said.

*REFINERY MARGINS

- Complex processing margins for Dubai in Singapore were around $6.40 per barrel, down from an average of the last five days of $7.26, Reuters data show. Over the last year, the average margin has been around $8.25 per barrel.

* CRACK SPREADS

- Fuel oil’s December crack widened 24 cents to a discount of $4.37 a barrel to Dubai crude.

- Gasoil’s December crack rose 70 cents to a premium of $20.76 a barrel to Dubai crude.

- The naphtha CFR Japan front-month crack widened 21 cents to a discount of $12.29 a barrel to Brent.

*OUTRIGHT PRICES

- January ICE Brent fell to $108.85 a barrel at 0830 GMT, down $2.81 from the same time a day earlier.

- January Oman fell $2.13 to settle at $109.11.

Reporting by Florence Tan

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