Oman crude oil prices up 7.5pc for November
NEW YORK — Oman crude oil's official price for November on the Dubai Mercantile Exchange Ltd. rose 7.5 per cent from October on concerns of lower supply.
Oman was set at $73.49 a barrel, up from October's $66.34, based on a Bloomberg calculation of the average closing prices for the past month's trading. The November contract closed at $76.49 at 12:30 p.m. Dubai time, the exchange said in an e-mail.
Middle East crudes climbed this month as refiners snatched up cargoes on concerns that maintenance at fields in Abu Dhabi would limit supplies for October and November. Royal Dutch Shell Plc's buying of a record 310 Dubai partials contracts through the oil pricing system of Platts boosted prices.
"The market partly found strength on the back of Shell's purchases,'' said Ehsan Ul Haq, head of research at Vienna-based PVM Oil Associates GmbH. "The Abu Dhabi maintenance may take as much as 500,000 barrels a day out of the market.''
Crude oil from Oman, the largest Middle East producer that isn't a member of the Organisation of Petroleum Exporting Countries, and Dubai are the benchmarks for other grades in the region. Saudi Aramco, the world's largest state-owned oil company, sets its prices against the average of Oman and Dubai.
The open interest, or the number of futures that haven't been closed, liquidated or delivered, for November Oman was 3,791 contracts.
Oman crude oil futures for December delivery fell 57 cents to $76.10 a barrel on the Dubai Mercantile at 6:56 p.m. Singapore time with 428 lots traded. The open interest was 500 contracts.
The number of Oman contracts traded on the Dubai Mercantile surged this month following the completion of the first full delivery cycle of August cargoes, the Exchange said.
The trading volumes for the October future when it was the so-called front month, or closest to delivery, averaged about 110 contracts. November climbed to an average of about 676, according to Bloomberg calculations of Dubai Mercantile data.
"People were waiting for the August contract to go physical,'' said Gary King, Dubai Mercantile chief executive in a Sept. 27 telephone interview. "That's the piece of the puzzle that differentiates us from other initiatives that have taken place in the past. That has given the market confidence.''
Activity in the Oman contract has extended beyond the delivery month underlying the expanded interest in the exchange, said King. The bourse currently has open interest in the future for December 2008 delivery.
The higher volumes may attract a greater number of participants who may believe the exchange has a high level of liquidity, or a number of buyers and sellers taking part.
"I'm really happy to be honest. I was really concerned for awhile,'' said Anthony Nunan, assistant general manager for risk management at Mitsubhishi Corp. in Tokyo during a Sept. 26 telephone interview. "Speculators wanted to get in but it was so illiquid that they couldn't get out but with more liquidity they'll be looking to get in.''
Shell purchased another 22 Dubai partial cargoes on the oil trading system operated by pricing service Platts yesterday, said traders who witnessed the transactions. The sellers included Sempra Energy Trading, Phibro Inc., Chevron Corp., Vitol Corp., SK Energy Ltd., PTT Pcl and Total SA.
China International United Petroleum & Chemicals Corp., or Unipec, sold five Oman partials to Shell, the traders said.
Shell has bought Dubai partial cargoes totalling about 7.75 million barrels on the system operated by Platts, based on information provided by the company. The deals must be consolidated into one cargo when the same buyer and seller agree to trade 19 or more of the 25,000-barrel lots.
Phibro Inc. declared that it would deliver an Oman cargo to Shell in lieu of Dubai, while China International United Petroleum & Chemicals Corp., or Unipec, declared delivery of two Oman cargoes in lieu of Dubai, traders said.
Shell has now taken four Dubai, 10 Oman and three Upper Zakum cargoes this month through the Platts system. The oil company also offered Abu Dhabi's Murban crude at a premium of 45 cents a barrel to the crude's official selling price, traders said.
Oman oil for immediate loading gained $1.48, or 2 per cent, to $76.94 a barrel, according to Bloomberg data. Dubai crude for November rose $1.38, or 1.8 per cent, to $76.64 a barrel at 5:33 p.m. in Singapore. Murban crude climbed $1.38, or 1.7 per cent, to $81.86 a barrel.The Brent-Dubai exchange for swaps for November widened to $4.97 a barrel from $4.64 a barrel yesterday. The December differential was at $4.90 a barrel from $4.62 a barrel previously. A premium of less than $3 for Brent compared with Dubai typically attracts cargoes to Asia from Europe and Africa.
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