SINGAPORE: DME Oman and cash Dubai strengthened in the Middle East crude market on Tuesday ahead of announcements of official selling prices (OSPs) from Gulf producers this week.
Cash Dubai's discount to Dubai swaps narrowed to about 50 cents from close to $1 in the previous session after Shell bought most of the partials transacted in the window, traders said.
Saudi Aramco is likely to be the first among Gulf crude producers to release OSPs. The world's top exporter is expected to keep prices little-changed for most of its crude to Asia in June from May.
Strong demand for Middle East crude in Asia and the peak summer cooling demand season in Saudi Arabia could lead to moderate price hikes, analysts at JBC Energy said in a note.
"One other factor that should be taken into consideration was record buying of Dubai partials in the Platts MOC window that appears to have had no discernible impact on the Dubai contango," JBC said.
Unipec's purchases at the back of the curve may have levelled out support from Chinaoil's prompt purchases which hit a record last month, the consultancy said.
"To what extent Saudi Arabia will factor this massive buying spree into its price-setting process remains to be seen," it said.
UAE's ADNOC is expected to raise the April OSP differentials for Murban and Das by 40-50 cents a barrel, while that for Upper Zakum could rise by 30 cents, a trade source said. The price hikes could be slightly lower than spot levels so that the Abu Dhabi grades will remain competitive in the market, he said.
Qatar could raise the April OSP differential for Marine crude by about 40 cents, in line with spot deals, traders said.
DME Oman for July settled at $64.58, up 25 cents, at 0830 GMT. This puts DME Oman at $0.55 a barrel below Dubai swaps, up against a discount of $0.83 in the previous session.
Dubai crude, as quoted by price-reporting agency Platts, averaged $58.55 a barrel for April, the highest since December, traders said.
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