SINGAPORE: Middle East crude oil price benchmark Dubai weakened further on Monday in response to selling pressure, trade sources said, pushing the premium of Brent over Dubai to its highest in 16 months.
The weak benchmark has buoyed Asia refiners' margins and is likely to drive demand for Middle Eastern and Russian crude priced on Dubai. But Dubai's widening discount to Brent could potentially curb Atlantic Basin crude arbitrage flow to Asia.
Brent-Dubai Exchange of Futures for Swaps (EFS) for January was valued at $2.60 a barrel, up 30 cents from Friday's close and the widest since July last year, Reuters data showed.
A wider spread between the two markers makes crude priced on Dubai more attractive to Asian refiners. Atlantic Basin crude, which are priced on Brent, becomes less economical.
The spot Dubai price slipped into a wider discount of about $2.55 a barrel against swaps after Reliance, Vitol and Mercuria sold five Dubai partials to Shell during the Platts Market on close process, traders said.
Prompt Dubai inter-month swaps spreads also widened in contango by 10-20 cents a barrel from Friday to 80-90 cents. In a contango, prompt oil is cheaper than future supply indicating weak spot demand.
Weak Dubai has partly lifted complex refining margins in Singapore to a 5-day average of $8.23 a barrel, up from $6.78 in October.
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