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Brent-Dubai Spread Falls As Global Crude Flows Redirect

OIL

The price differential between Brent and Dubai crude is trading increasingly negative according to data from brokerage PVM as global crude flows redirect.

  • The spread was at a discount of -1.60$/bbl 7 Aug compared with a premium of more than +3$/bbl in January.
  • Brent generally trades at a premium to Dubai as its lower sulphur content and lighter density tends to produce higher-quality fuels.
  • Production cuts by Saudi Arabia and Russia have tightened the medium-sour crude market while increasing Saudi OSPs have further supported benchmark Dubai prices.
  • The falling spread makes it more viable to sell barrels produced in and around the Atlantic Ocean into Asian markets.
  • The inclusion of US WTI in the Dated Brent benchmark has also weighed on Dated Brent due to a flood of US crude to be offered and delivered into the benchmark.
  • Open interest on the Brent-Dubai spread hit a record last month and is 67% higher than a year ago.


Source: Bloomberg

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