06NOV2019 - NEWS - January Brent/Dubai spread widens on IMO 2020 expectations

Benchmark Dubai crude futures’ discount to ICE Brent widened in Tuesday morning trade in Asia, increasingly pricing in the quality premium expected to be commanded by low sulfur crude grades over higher sulfur barrels due to the IMO 2020 sulfur cap on marine fuel.

A wider EFS reflects a higher quality premium for Brent crude, which is a low sulfur grade, compared with Dubai crude that is higher in sulfur content. Other grades similar to Brent in quality and linked to it in pricing would also be priced higher relative to Dubai-linked grades as a result.

Crude market participants in Asia are bracing for higher prices in light, low sulfur crudes as trading for January 2020 begins this month; the Asia and Middle East sour crude markets trade grades loading two months forward from the current calendar month.