Crude Oil Price Movements
OPEC Monthly Oil Market Report – October 2017
The Dubai market structure was in backwardation over most of August and September, during which period
differentials for some Middle Eastern crudes reached their highest premiums against Dubai in months, which
suggests that refiners drew down some of the massive stocks they had built up. The backwardation in the
Dubai markets enticed further commercial refinery crude stock draws in China, a trend that has continued in
The Dubai M1 8¢/b discount to M3 flipped into a premium of 24¢/b, improving 32¢. The North Sea Brent
M1/M3 30¢ backwardation strengthened to 56¢/b, a 26¢ improvement. In the US, the WTI contango
worsened by 35¢ as WTI’s (M1-M3) widened to 80¢/b.
The NYMEX WTI crude front month discount to the same month of ICE Brent futures fell to $5.64/b, its
lowest since August 2015, making US crude the most attractive grade for arbitrage into both Europe and
Asia. Hurricane damage to US refineries hit demand for WTI and pressured prices, while Brent prices were
boosted by OPEC and non-OPEC producers’ output adjustments, maintenance to North Sea oil fields and
strengthening demand in Europe for distillates. With this large gap in the price of a barrel of US WTI crude
and Brent, the international benchmark, US oil exports rose to an all-time high of 1.98 mb/d in the last week
of September, surpassing the previous record of nearly 1.5 mb/d that was seen during the previous week.
This has also created an opportunity for USGC condensate, such as Eagle Ford, to find its way into the
Asian market. This increasing arrival of arbitrage crude is set to put significant pressure on locally-sourced
grades. The first-month ICE Brent/NYMEX WTI spread widened to $5.64/b in September, a $1.83, or 48%,
Table 1 - 3: NYMEX WTI and ICE Brent forward curves, US$/b
6FM 12FM 12FM-1FM
25 Aug 17
25 Sep 17
25 Aug 17
25 Sep 17
Note: FM= future month.
Sources: CME Group and Intercontinental Exchange.