SINGAPORE: The Middle East crude market structure has strengthened over the past week with the front-month spread narrowing by almost 30 percent.
The January-February spread was at minus 41 cents a barrel versus 58 cents last Friday, Reuters data showed.
Buying interest for January-February and January-March spreads was strong, pointing to a bullish pricing agenda next month, trade sources said.
"It's going to go on regardless of OPEC as the market is genuinely strong anyway," a trader said, adding that strong fuel oil cracks were supporting demand for medium, heavy sour grades.
The strengthening in Dubai market structure comes ahead of OPEC's Nov. 30 meeting, where the producer group is expected to decide on production cuts.
Saudi Aramco has agreed to supply some customers in Asia with incremental crude loading in January, as it holds to a strategy of maintaining market share, trade sources said.
The decision by the world's top exporter to give extra oil came weeks before Saudi Aramco was due to notify customers of their monthly supply allocation. For January supplies, allocations would have only been made around Jan. 10.
The excess Saudi supplies, combined with a rise in arbitrage inflows from Europe and the United States, have depressed Asia's demand for similar quality light sour crude grades such as those from Abu Dhabi.
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