By Wendy Cheong in Singapore
The official selling price for Dubai crude loading in August has been set at a premium of 10 cents/b to the average settlement of August Oman crude
futures on the Dubai Mercantile Exchange during June, Dubai's Department of Petroleum Affairs said May 24.
This is the first time since the Dubai OSP was set as a differential to Oman in September 2009 that it is at a premium to Oman.
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The Dubai OSP was set at parity to Oman in December 2010 for Dubai cargoes loaded in March 2011.
Market sources said the August Dubai OSP was set at a premium to Oman because participants in the Dubai crude partials contract on the Platts Market on Close assessment process have been bidding Dubai above DME Oman futures, resulting in cash Dubai settling above DME Oman for most of this month.
"The way the DPA sets the OSP is by comparing Platts Dubai against DME Oman. Usually Platts Dubai is lower than DME Oman. As DME being cash Oman can be delivered into the Dubai partials contract, it cannot be lower than Dubai," said a trader.
A slowdown in Oman buying by China due to a seasonal demand lull during the summer as well as a slowing economy has led China to cut back on its Oman buying.
Last month, the OSP for Dubai crude loading in July was set at a
discount of 10 cents/b to the average settlement of July Oman futures on the
DME in May.
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