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Brent-Dubai EFS near 17-month high amid stronger Brent price

  • Sep.29,2017
  • Source: chemnet

The Brent/Dubai Exchange of Futures for Swaps, the premium of ICE Brent crude futures to Dubai swaps, eased some of its gains on Wednesday following the ICE Brent November Futures contract's price movement, after hitting a near 17-month high on Tuesday.

The November EFS was assessed at $2.33/b at the 4:30 pm Asia close Wednesday, down from $2.59/b Tuesday, which was the highest since May 12, 2016, when it had touched the same level of $2.59/b, according to data from S&P Global Platts.

A key reason behind the strength seen in EFS in recent days was rising crude prices, with the ICE November Brent Futures contract touching an intraday high of $59.49/b, the highest for the front-month contract not seen since July 2015, before retreating to settle at $58.44/b on Tuesday.

"Supply disruptions, combined with a solid global demand, are working to support prices," ANZ Research analysts said in a note earlier this week.

The growing bullishness in the market stemming from various factors, including improving compliance from OPEC producers, a stalling US rig count, and declining inventories in the US, has helped in boosting crude prices, analysts said.

However, the European benchmark has eased some of its gains on profit- taking to settle at $57.90/b on Wednesday. Following suit, the EFS also eased some its gains to settle at $2.33/b on Wednesday.

On a monthly basis, the Brent/Dubai EFS averaged at $1.86/b in September to date -- the highest since December last year when it was at $2.17/b, Platts data showed.

The wider EFS has limited opportunities for arbitrage barrels from the West to Asia and has partly supported the demand for Dubai-linked crudes this month, traders said. A wider EFS raises the value of Brent-linked crudes against Dubai, making the Dubai-linked crudes more attractive to buyers.

Reflecting the stronger demand for these crudes, cash differentials for Far East Russia's Sokol crude hit a nine-month high of $4.00/b premium to Platts Oman/Dubai assessments on Wednesday, while cash differentials for November-loading Abu Dhabi's Murban crude have also risen to 17-month highs during in September, Platts data showed.