Amid global economic recession fears pressuring oil prices worldwide, robust demand from Asian economies like China and Japan boosted spot oil prices in the Middle East on Wednesday, June 21.
Reports state that by Wednesday, the spot price difference for Oman crude oil slated for August shipment rose to over $2 per barrel, up from 60 to 70 cents last week. A premium on Murban crude oil grade from the United Arab Emirates' Abu Dhabi also surged-an overnight spot price difference of 10 to 20 cents, a rare occurrence.
Trade merchants say Asian refiners' rush to buy crude oil spot in recent days has fueled the region's oil price hike, including refineries in China, Japan, and Thailand among others. The increase in activity in the typically quiet Middle East crude oil trading window also sparked interest from market participants.
Media analysis suggests that after trading a certain amount of Dubai crude oil, cargoes of crude oil, including Oman, Murban, and other Middle Eastern grades, began spot trading. The usual shipment volume is 500,000 barrels. Oman, a country known for large export volumes and frequent buying and selling, is one of the easiest to transact with in spot trading. So far this month, nearly 40 batches of Omani crude oil spot and two batches from the UAE have been delivered, marking the most active month of spot trading in these areas in years.
Currently, a dramatic shift has occurred in the mood of the crude oil market and the sharp rise in spot prices compared to earlier this month when traders were unsure about the future market direction.
On Wednesday, June 21, the spot premium of Dubai's prompt swap contract also rose to a six-week high, and the premium of London's Brent crude oil relative to the Middle East's benchmark crude oil narrowed to less than $1 per barrel. Earlier this month, Saudi Arabia unexpectedly cut production further, causing a surge in official oil prices shipped to all regions.
Last month, there was a brief concern that demand in Asia's crude oil market would continue to be sluggish. But now, with the "king's return" to China's market, Asia has once again become the center of global crude oil demand.
On Wednesday, WTI crude oil for August delivery rose $1.34, up 1.88%, to $72.53 per barrel. Brent futures for August increased by $1.22, up 1.61%, to $77.12 per barrel.
U.S. WTI rose as much as $1.51 or 2.1%, exceeding $72, virtually erasing the decline since June 8. Brent rose as much as $1.33 or 1.8%, exceeding $77, erasing the decline since June 7, reaching a two-week high.
