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OIL: Strong Murban Prices on Middle East Cargo Purchases

OIL

Murban crude prices are the highest this month with October up to a premium of $1.41/bbl as Asian refiners buy Middle East light crude oil cargoes, according to Reuters sources.

  • High Brent and WTI prices are curbing arbitrage supply from the U.S., Europe and Africa. WTI Midland to Asia were strong at $5-$6/bbl above Dubai for November delivery. Brent crude's premium to Dubai reached a 10-month high earlier this week.
  • Refiners in South Korea and Japan have purchased October loadings of spot Abu Dhabi light grades - Murban, Das and Umm Lulu - in the past two weeks. Indian Oil Corp bought 3mbbl of Murban via a tender this week.
  • The sources suggest the strength in WTI and Brent is due to low Cushing inventories and stronger curve backwardation.
  • The wide Brent-Dubai spread and strong dated Brent prices are supporting WTI Midlands supply to Europe.
  • Weak Chinese demand is however limiting Middle East medium sour crude prices, with Dubai and Oman lagging gains seeing in Murban.

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