Middle Eastern Crude Strengthens as Buyers Chase Cheap Cargoes

(Bloomberg) -- The price of some Middle Eastern oil has climbed after buyers snapped up cheap cargoes as calm returned to Asia’s physical market.

The spot differential for cargoes of Abu Dhabi’s Murban crude scheduled to be loaded in June increased more than $1 a barrel in less than a week, according to traders who asked not to be identified. The price of the oil grade, along with others such as Upper Zakum and Das, had bottomed recently making them more attractive to buyers, they said.

Refiners in South Korea, Thailand and Japan have purchased Murban for loading in June, while Marathon Petroleum Corp. -- a U.S. processor -- also bought the grade. There is some caution around Chinese demand, however, due to a virus resurgence that has led to a series of lockdowns, said traders.

Oil prices cooled following a volatile period of trading in the middle of March after Russia’s invasion of Ukraine, with some refiners pausing their buying due to wild price fluctuations. Middle Eastern barrels are also cheaper compared with crude from the U.S. and North Sea, according to traders. Differentials can indicate the strength or weakness of underlying demand. 

Cheaper oil adds to stronger processing margins for refiners that are rebounding from the worst of the pandemic. Returns from turning crude into diesel have climbed to the highest level in six weeks.

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