SINGAPORE: The Middle East crude benchmark Dubai strengthened on Friday, narrowing the prompt monthly spread to just 10 cents a barrel in contango, industry sources said.
Cash Dubai's discount to swaps narrowed 9 cents after Unipec sold a partial to Chinaoil at $36.60 a barrel, traders said.
The May-June spread narrowed 7 cents from the previous session to 10 cents a barrel.
The recent strength in Dubai's market structure baffled some traders as it typically points to strong prompt demand.
"With the highest refinery turnarounds in Asia in June, May Dubai strength is shocking!" said a trader with a western firm.
Crude sellers have ample supplies to offer into spot crude markets in Asia, with demand cooling due to heavy refinery maintenance and as a strengthening in prompt prices has deterred traders from holding oil for sale at later dates.
As the contango spreads narrow, traders can be forced to offload their cargoes as quickly as possible.
"There is no lack of crude in the market," a trader with a north Asian refiner said. His company has received offers of spot Oman, ESPO and Vietnamese grades even as most refiners have already completed their purchases for May-loading cargoes.
Still, Dubai-linked crude may get a boost in demand after Brent's premium to Dubai crude hit the highest in more than two months.
Brent-Dubai Exchange of Futures for Swaps (EFS) for June was valued at $3.65 a barrel, the sources said, up 28 cents from Thursday's close. This is the widest since Jan. 14, according to Reuters data.
A wider spread makes Dubai-linked grades more attractive than those priced on Brent. It also discourages the flow of Brent-linked crude from the Atlantic Basin to Asia.
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