SINGAPORE: Brent crude's widening premium to Dubai swaps could put pressure on the Asia-Pacific crude market, though a reduced number of cargoes arriving from the Atlantic basin is likely to help to balance the market.
Brent's premium to Dubai crude rose above $4 a barrel on Wednesday for the first time since July 2014, Reuters data showed. A wider spread makes Middle East grades more attractive than regional grades priced on Brent but also caps crude arbitrage volume from the Atlantic Basin to Asia.
Brent-Dubai Exchange of Futures for Swaps (EFS) for January rose to $4.14 a barrel, up 26 cents from Tuesday's close and the widest premium since July 1 last year, the data showed. Brent-Dubai's EFS for February was $3.54 a barrel, up 13 cents, according to trade sources.
A combination of the wider EFS and higher freight rates had slowed West African shipments to refineries in North Asia this month, traders said, potentially prompting some to look at shorter-haul regional grades.
Oil markets could run out of onshore crude storage in the first quarter of 2016 as production continues to exceed demand, PIRA Energy said.
Goldman Sachs said that "in the near term, we see risk of reaching storage capacity in the oil market, which could force spot prices to cash costs of around $20 per barrel".
Benchmark Brent crude futures have fallen by nearly 8 percent since Friday, when OPEC failed to agree a ceiling on production, increasing the likelihood of a more persistent global oil surplus next year.
Three cargoes of Australia's Northwest Shelf (NWS) condensate were due to load in February, according to a preliminary loading programme.
Shell would load a Feb 7-11 cargo, BHP Billiton a Feb 16-20 cargo and Woodside a cargo loading Feb 24-28.
Comments
Comments are closed for this article.