The prices of a Middle Eastern crude favored by many Asian buyers and global benchmark Brent have diverged slightly this week as traders assess prospects for regional energy demand and banks tweak forecasts.
(Bloomberg) —
The prices of a Middle Eastern crude favored by many Asian buyers and global benchmark Brent have diverged slightly this week as traders assess prospects for regional energy demand and banks tweak forecasts.
While Abu Dhabi’s front-month Murban futures have gained a little more than 1%, Brent is poised for a modest weekly drop of 0.2%. That’s the first time since October the pair haven’t moved in the same direction on a weekly basis.
The small divergence has come even as physical buying in Asia winds down toward the end of the month, and some banks have been tempering their outlooks for prices despite the optimism on China’s demand as it reopens.
Given their global role, Brent futures tend to be driven by broad fundamentals and geopolitical events, while Middle Eastern contracts are typically more reflective of Asian physical-market dynamics. Traders are closely monitoring the moves in Murban given that the most-active period of trading April-loading physical barrels in Asia has passed.
“Brent is clearly the international benchmark, where liquidity would also be much deeper than Murban futures,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. “So it would take a lot less to push Murban around than Brent.”
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