One crude, two prices: Oman puts benchmark DNA in the spotlight

Why is the benchmark value of Oman crude oil sometimes spectacularly different when assessed by S&P Global Platts, compared to the value established for the very same crude oil through trading on the Dubai Mercantile Exchange? In 2018, it is an important question because the answer shines a bright spotlight on how different the DNA can be for different price benchmarks representing the same market, which ultimately can have huge value implications. In the last week of September, physical Oman crude for loading in November surged to settle as much as $7.61/b higher on the DME, when compared to the value of physical Oman delivered for the same month, as assessed by Platts. To put it another way, Oman was at times 10% more expensive when valued by the DME reference price than by the Platts Oman benchmark – raising the value of a VLCC loaded with Oman by $15 million. Significant price differences between DME Oman and Platts Oman continue this month. But why? In itself, the crude is the same, the loading dates are the same, the time of trading is more or less the same, and the market participants active in trading Oman oil are broadly the… continue reading

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Source: CTRM Center

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