SINGAPORE: The Middle East crude market was supported by healthy refining margins on Monday, while Dubai swaps weakened further against the Brent benchmark taking them to their lowest in more than a year.
Brent's premium over Dubai swaps widened to $2.72 a barrel, the highest since July last year.
Asian refiners rushed to secure cargoes because of expectations that supply may tighten as more Middle East crude flows to Europe, traders said.
According to traders and shipping data, oil from Saudi Arabia, Iraq and other Middle Eastern countries has recently been shipped to Europe for the first time in many years.
While Russian producers were expected to offer further discounts on crude to defend market share on its traditional European market, values for Russian Pacific grades strengthened.
Spot differentials for Russian Sakhalin Blend climbed above those of Sokol after Sakhalin Energy sold a cargo loading Jan. 15-22 at $4.70-$4.90 a barrel above Dubai quotes, traders said, the highest in more than a year.
January Sokol crude was most recently valued at a premium of around $4 a barrel or slightly higher, Reuters data showed.
Russian grades may have been supported by new demand from independent Chinese "teapot" refiners as well as high freight rates on Middle East routes.
Robust diesel and fuel oil cracks supported medium grades. Qatar Marine last week rebounded some 30 cents to around 20 cents a barrel below its official selling price (OSP), while Banoco Arab Medium was at a single digit discount to its OSP, traders said.
No cash deals were reported in the Platts window on Monday, a trader said.
Official selling prices into Asia are approaching a discount of $10 a barrel to Brent, the same level as at the end of last year when Middle East exporters cut prices to maintain export levels in an over supplied market, analysts at BMI Research, part of the Fitch ratings agency, said in a note to clients.
"With Brent oil currently trading below its January lows ... this is a bearish indicator for prices moving into the winter," they said.
DME OMAN
DME Oman for January settled at $39.38, down 53 cents, at 0830 GMT. This puts DME Oman at $1.65 a barrel below Dubai swaps, down 5 cents from the previous session.
MARKET NEWS
Pertamina and Saudi Aramco are expected this week to take a major step in forming a joint venture that will include a $5 billion upgrade to Indonesia's largest refinery complex, a director at the Southeast Asian firm said.
China's October Iranian crude oil imports edged down slightly from a year earlier to their lowest level in 14 months, official customs data showed on Monday, due in part to the outage at a petrochemical producer that suffered a fire in the spring.
A surprisingly abrupt breakdown in US crude oil spreads this week has strengthened some traders' conviction of a decisive move below $40 a barrel, extending the early winter price slump.
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