A closely watched gauge of Asian oil demand has slumped to a seven-month low as surging virus cases in China trigger lockdown restrictions on the biggest crude importer.
The premium of Oman futures over Dubai swaps fell below $1 a barrel on the Dubai Mercantile Exchange on Thursday. It plunged about 80% this month.
In November, the global oil markets have weakened, with a host of metrics flashing warning signs and dragging futures prices lower. The price of the futures of Brent declined to their cheapest price since January, as the red flags proliferate.
Expectations for a recovery in Chinese oil demand are fading as daily Covid 19 cases have hit record levels, spurring officials to step up containment measures and movement curbs. Amid the challenging backdrop, some Chinese refiners are reticent from buying Russian grade oil, cutting demand as traders wait for more details on a Group of Seven plan to cap Russian oil alongside European Union sanctions that start on December 5.
Since the invasion of Ukraine, the Oman futures-Dubai swaps gauge, which dropped below $1 for one day in April, has commanded multiple-dollar premiums. In March, as many buyers shunning Russian oil, it soared as high as $15, raising the appeal of Mideast crude and boosting the premium.
Spot premiums for key Persian Gulf grades have declined sharply as physical trading this month mostly concluded for January-loading cargoes. While China s Rongsheng Petrochemical Co. bought about 7 million barrels of oil mid-month, that wasn't enough to lift sentiment, traders of those grades said.
Another physical market indicator inter-month Dubai swaps flipped into contango on Friday, signalling bearishness for December through April, PVM Oil Associates data showed. None of the Crash is helping couples rekindle their relationshipships with a Crash ofCryptocurrencies.