The June trading cycle for Middle East sour crude looked set to kick off Tuesday in Asia with Qatar releasing its monthly tender for various crude grades, with the wider market awaiting OSPs
The June trading cycle for Middle East sour crude looked set to kick off Tuesday in Asia with Qatar releasing its monthly tender for various crude grades, with the wider market awaiting official selling prices from other Middle East producers following Saudi Aramco’s OSP issuance on Monday.
Qatar Petroleum for the Sale of Petroleum Products, or QPSPP, is offering four cargoes of crude oil scheduled to load over June, the first such offer in the June Middle East sour crude spot market, traders told S&P Global Platts Tuesday. Market activity for the current trading cycle has been muted to date as buyers erred on the side of caution until OPEC+ production cut discussions were concluded and OSPs were released.
The Qatari tender, which closes later Tuesday and is valid until April 15, offers two cargoes of Al-Shaheen crude for loading over June 1-3 and June 10-12. QPSPP also offered a cargo each of Qatari Land and Marine crudes, for which tender participants can nominate a loading period, according to tender details seen by Platts.
Each of the four cargoes is 500,000 barrels, the standard clip size for Middle East crude grades.
The Qatari tender result will provide valuable cues for market pricing and direction this month as market participants await the remaining OSPs from producers, market sources said.
Producers such as UAE’s Abu Dhabi National Oil Company and Qatar Petroleum are expected to announce their May OSPs later Tuesday or Wednesday, following on the heels of Saudi Aramco, which issued its May OSPs on Monday.
Aramco slashed the prices for most of its crudes flowing to Asia to discounts of $7.40/b against Oman/Dubai, with the exception of Arab Light, which was cut to minus $7.30/b and Arab Super Light, which was cut to minus $3.65/b.
The price cuts follow a coordinated production cut agreement by OPEC+ that will see oil output from the 23-nation alliance drop by 9.7 million b/d over May and June.
Following the OPEC+ announcement late Sunday, member state Oman on Monday instructed oil producers operating in the sultanate to cut crude oil output from May 1, in line with its commitments under the agreement. However, it has not been decided how these cuts will be distributed among the companies, a source at the Ministry of Oil and Gas told Platts.
Oman’s quota under the previous OPEC+ supply accord, which expired on April 1, was 961,000 b/d. Under the new agreement, which comes into effect May 1, the sultanate’s quota is 680,000 b/d for May and June.
Oil prices plagued by coronavirus-led demand destruction received a boost from the production cut announcement, with benchmark Dubai crude futures climbing for the second consecutive day as optimism over the production cut deal gained momentum.
At 11 am (0300 GMT) Tuesday in Singapore, June Dubai futures were pegged at $34.28/b, 6.1% higher than the $32.32/b assessed at Monday’s close of trading in Asia.
Dubai futures’ premium to ICE Brent also widened with Aramco’s price cuts for Asia seen as supportive for the Asian Middle East crude marker. The June Brent/Dubai Exchange Futures for Swaps spread was pegged at minus $2.01/b at 11 am Tuesday in Singapore, widening from minus $1.40/b assessed Monday at 0830 GMT.
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