Two weeks ago, the prompt Brent/Dubai appeared to be hitting a bottom at -14c/bbl with players anticipating a recovery upwards in the near term. Cut to, the prompt Brent/Dubai capitulated to -50c/bbl come May 20. This weakness emerged out of one trade house aggressively buying Dubai spreads in the June to Dec region in substantial volumes whilst simultaneously selling good volumes of the Q4’24 and Q1’25 Brent/Dubai contracts – thus tanking the curve along the way.
Making matters worse for Brent/Dubai is the abysmal sentiment permeating into Dated Brent and Brent spreads, with the front spread hitting 15c/bbl on May 21. In addition, with the Dated/Dubai now below -80c/bbl handles in the prompt, we appear to be approaching historically low levels in the contract. At these lows, a bounce upwards seems likely, however, the relative strength noted in Dubai when compared with Brent may hinder any upside from being too substantial.
This strength in Dubai, or more generally in medium sour crude was also reflected in the physical where Murban was recorded as the cheapest part of the Dubai complex. Although volumes have dwindles and the pricing spread continues to see uninspiring price action over the past two weeks, we see more interest divert towards the more sour Al-Shaheen and Upper Zakum grades of crude. When coupled with the incredible strength seen in heavier products such as Asian HSFO relative to its European counterpart, the conclusion to really draw from this fortnight is that it’s sour crude’s world and we’re just living in it.
