Cheap, high grade Brent-linked crude fails to woo Asia

SINGAPORE (Reuters) – OPEC’s deep supply cuts pushed the Brent/Dubai Exchange of Futures for Swaps (EFS), a key crude oil hedging tool, to its first-ever discount this month, but expected African and European cargoes have yet to flow to Asia.

Sinking fuel consumption during the economic crisis and a durable improvement in the value of Middle East crude as its demand rises to feed more complex refineries mushrooming across Asia, have come at the expense of light-sweet Brent-linked crude.


The Brent/Dubai EFS for February — the price spread between ICE Brent futures and Dubai swaps — dipped to negative levels for the first time on January 6.

The decisions by the Organization of the Petroleum Exporting Countries to remove 4.2 million barrels per day (bpd) off world markets since September to stop oil’s fall and signs that members are complying with the pacts, have made Middle East crude scarcer, pushing up benchmark Dubai grade values versus Brent.

Reuters