Dubai crude futures traded volume on TOCOM rebounds in March from record low

The volume of Dubai crude oil futures contracts traded on the Tokyo Commodity Exchange rose 3.95% month over month to 92,781 lots in March, the latest TOCOM data showed, plunging to a record low since historical data available up to June 2016.

However, the figure was 27.89% lower compared to the traded volume in March 2024.

Each Dubai crude futures contract is 50,000 liters, which is equivalent to around 314.5 barrels.

TOCOM's Dubai crude oil futures plunged to record lows in February due to heavy inflows of arbitrage crudes from the West, leading to increasingly bearish sentiment.

In particular, increased sales of Kazakhstan's light, sour CPC Blend and the US' staple export grade, WTI Midland, weighed on Asia's light crude complex in February. Some traders estimated that nearly 20 million barrels of CPC Blend, loading in February and March, were sold to Asian buyers.

However, in recent times, sentiment for the May-loading Middle East sour crude market in March has been mostly bearish, influenced by a heavy spring maintenance program across Asia, particularly in China.

The front-month Platts Dubai cash-futures spread, an indicator of sentiment for the Middle East crude market, averaged at a premium of $1.40/b over March, down $1.91/b month over month.

Meanwhile, the spread between Brent swaps and Dubai swaps—typically more reflective of Eastern and Western physical crude fundamentals—has reached fresh historical lows, with spreads at the prompt plummeting to all-time lows in Platts data going back to 2001.

Platts assessed the second month spread at minus $1.26/b at the April 3 Asian close, a record low in Platts data going back to March 29, 2001.

The Brent-Dubai price spread is likely to remain under pressure over the next several trading cycles due to tougher sanctions on buyers of Iranian and Venezuelan crude. This may prompt several Chinese and Indian refiners to source more Middle Eastern crude.

Some US end-users might also increase their intake of Persian Gulf sour crude if cracking margins for heavy sour Canadian and Mexican crude falter due to higher tariffs, according to traders and refinery sources in Singapore, Hong Kong, Seoul, Bangkok, Beijing, and Tokyo.

The Asian Dated Brent-Dubai swap spread averaged at a discount of 17 cents/b in March, compared to a premium of 11 cents/b in February, Platts data showed. The spread has since narrowed further, and the Asian Dated Brent-Dubai swap spread was last assessed at a discount of 33 cents/b at the April 3 Asian close.

On the physical front, 149 Dubai partials were traded during the Platts Market on Close assessment process over the first three trading sessions in April, marking a sharp gain from the 51 partials traded during the same period the previous month, as buying interest resumed in prompt market fundamentals.

The front-month Dubai swap settled at $72.73/b at the start of March and ended the month 2.34% higher at $74.43/b, Platts data showed.

Looking ahead, the fundamentals for the June-loading Middle East crude market are expected to strengthen this month as refineries across the region gradually return from maintenance. Nonetheless, this will be counterbalanced by the prospect of greater supply, as OPEC+ producers continue to unwind their output cuts starting in April.

OPEC+ said April 3 that it will hike output in May far more than previously signaled, adding fuel to a crude selloff already triggered by US President Donald Trump's tariff announcements, in what sources described as an effort to "shock" key members into compliance with quotas.

The move by eight countries collectively implementing 2.2 million b/d of voluntary production cuts will see quotas rise by a combined 411,000 b/d in May, OPEC said in a statement released following a meeting to review global market conditions.

The new May bump is equivalent to three monthly increments, OPEC said, with May quotas now at the level it previously planned to reach in July, "in view of the healthy market fundamentals and the positive market outlook."

"More OPEC+ supply should translate to more medium sour crude oil and a wider Brent-Dubai spread. This spread has seen an unusual discount for much of the year. It's partly driven by OPEC+ withholding large volumes of oil from the market at a time when buyers are looking for alternative supplies amid tougher sanctions on Iran, Venezuela and Russia." ING's Head of Commodity Strategy, Warren Patterson, along with Commodity Strategist Ewa Manthey said in a note dated April 4.

Previously, the front-month Brent-Dubai Exchange of Futures for Swaps spread, a key indicator of the fundamentals between Brent-linked sweet crudes in the West and Dubai-linked sour crudes in the East, declined to its lowest level in over 18 months. The May Brent-Dubai EFS was assessed at minus 18 cents/b at the March 20 Asian close, down 18 cents/b day over day and the lowest since August 24, 2023, when it was assessed lower at minus 19 cents/b.

Platts assessed the May Brent-Dubai exchange of futures for swaps at 23 cents/b on March 28, narrowing 46 cents/b or 66.67% from March 3 when it had settled at 69 cents/b, Platts data showed.

Dubai crude oil futures traded on TOCOM:

Source: Tokyo Commodity Exchange