Middle East Crude-Benchmarks mixed; Saudi maintains full allocation

SINGAPORE: Middle East crude benchmarks were mixed on Wednesday, with DME Oman slipping back to this month's low while cash Dubai edged higher.

The market is waiting for official selling prices from Iran, Iraq and Kuwait, while buyers are calculating their spot requirement for March-loading cargoes.

SAUDI ALLOCATION: Several buyers in Asia have received full Saudi crude allocation for February, unchanged from the previous month, sources with knowledge of the matter said. Saudi Arabia has maintained contractual obligations in Asia despite having to reduce output under an OPEC agreement.

ARBITRAGE: US crude oil exports to Asia are set to rise in the second quarter as sellers cut prices following sharp drops in freight rates and expected weaker demand in the United States, trading and shipping sources said.

The rate for chartering a Very Large Crude Carrier to ship 2 million barrels of oil from the Louisiana Offshore Oil Port (LOOP) in Houston to Singapore has fallen more than 40 percent from late-October to about $5 million, data on Refinitiv's Eikon showed.

Offers for US crude arriving in Asia in the second-half of March or April are about 50 cents a barrel lower than a month earlier, they said, making it more competitive against oil from the Middle East.

Offers for WTI Midland crude for delivery to North Asia are about a $2.50 a barrel premium to the Dubai benchmark, while Eagle Ford crude can be delivered to Asia at about $3 a barrel premium, the sources said. US Mars crude has become cheaper than Oman on delivery, they said.

Enquiries for ships to send oil from the US Gulf coast or South America to Asia have picked up, while West Texas Intermediate (WTI) at Houston - also known as MEH - and Mars are seeing strong demand from Asia, US-based trade sources said.

Companies looking for ships include P66, Mercuria, Reliance and Vitol while Shell has a VLCC on the way to Asia, said one source.

WINDOW: Cash Dubai's premium to swaps edged up to 5 cents a barrel versus parity in the previous session.

Total continued to offer a March-loading Murban crude cargo at 20 cents a barrel below its OSP, while Vitol also offered a cargo at $2 a barrel below Dubai quotes.

PDS raised its bid for March-loading Upper Zakum cargo to parity to Dubai quotes, up 5 cents a barrel from the previous session.