Dubai: Dubai oil, an Arabian Gulf benchmark for Asia, will sell at a wider discount to Omani crude futures in May as the emirate set its formula at the lowest in five months after producers including Saudi Arabia cut prices.
The official selling price for Dubai crude loading in May will be set at a discount of 40 cents (Dh1.46) to the Oman futures contract for that month, according to an emailed statement from Dubai's Department of Petroleum Affairs on Thursday.
The Oman futures contract is the only product traded on the Dubai Mercantile Exchange, which provided the differential announcement from the Dubai Department of Petroleum Affairs. The discount to Omani crude is the lowest since December 2009, when Dubai priced its oil at 45 cents below the DME-traded futures contract.
The differential widened from 35 cents for April and from 5 cents for cargoes lifted in February and March. The final price for May will be set on the last day of trading for that month's contract, when the Oman level is calculated.
Saudi Aramco, the world's largest state-owned oil company, lowered its March official selling prices on all crude types except the heavy grade for customers in Asia. Iraq widened the March discount for Basrah light to Asia. Iran, which uses a formula based on Aramco rates, also lowered its prices to Asia.
Dubai's Department of Petroleum Affairs generally issues the price formula for its crude on the last Thursday of every month to apply to the closing three months ahead. The Dubai Mercantile Exchange's futures contract sets the price for Oman's more than 800,000 barrels a day of production.
Demand wanes
Abu Dhabi crude oils traded at discounts to their benchmarks as demand from refiners declined after plants were shut for repairs.
Abu Dhabi's Murban for April loading was at a discount of two cents a barrel to its official selling price, according to data compiled by Bloomberg News. Lower Zakum was at a discount of six cents a barrel to its official level, Bloomberg data showed.
April-loading supplies are under pressure as refiners are planning to close plants for maintenance.
In Japan, Toa Oil Co and in South Korea, GS Caltex Corp and Hyundai Oilbank Ltd. will shut crude distillation units from April through May.
Qatar Marine for April remained at a discount of 28 cents a barrel, Bloomberg data showed. Cargoes were being offered at discounts of up to 70 cents to its official price, said three traders who participate in the market.
Oman crude for immediate loading increased 82 cents, or 1.1 per cent, to $76.02 a barrel. Dubai for loading in April rose 82 cents, or 1.1 per cent, to $75.62 a barrel. Murban climbed 1.1 per cent to $76.41.
Oman futures for April delivery rose 10 cents to $76.80 a barrel on the Dubai Mercantile Exchange at 6.12pm Singapore time yesterday, with 1,066 contracts traded.
The settlement price was set at $75.79 a barrel at 12.30pm Dubai time.
The Brent-Dubai exchange for swaps for April was unchanged at 75 cents a barrel and the exchange for swaps for May widened 1 cent to 66 cents a barrel, according to data from brokers PVM Oil Associates.
The exchange for swaps is the price difference between Brent and Dubai swaps contracts.
