Tuesday’s massive sell-off in the global crude oil markets spread on Wednesday to the Middle East crude oil complex, where prices for December cash Dubai—the nearest month trading in October—plunged by 4.42 percent at close of business in Singapore in the biggest drop since June, traders tell S&P Global Platts.
The most actively traded international oil benchmarks, Brent and WTI, plunged on Tuesday to a two-month low, with both WTI Crude and Brent Crude slumping by 4 percent—the worst one-day drop since July. The decline was prompted by a broader equity market sell-off earlier on Tuesday and the Saudi move to assure that there will be oil for each oil customer and that OPEC and allies are in a “produce as much you can mode.”
Later on Tuesday, the American Petroleum Institute (API) reported a huge build of 9.88 million barrels of United States crude oil inventories for the week ending October 19, adding further downward pressure on oil prices.
On Wednesday, twenty minutes before the EIA inventory report, WTI Crude was trading higher 0.90 at $67.03, while Brent Crude was up 0.30 at $76.67. As EIA confirmed a build, albeit a smaller one, Brent and WTI prices held steady.
But across the Middle Eastern, the December Dubai cash slumped on Wednesday by 4.42 percent to settle at $74.40 a barrel, down on the day from $77.84. This was the biggest day-on-day price movement in the front-month Dubai cash price since June 18, 2018, when the price of Dubai cash plummeted by 4.55 percent to $70.94 a barrel.
Yet, according to Platts data, the December Oman futures contract traded relatively higher on Wednesday on the Dubai Mercantile Exchange, with the December Oman futures at $75.42 in the afternoon Singapore time, just $0.28 per barrel lower than December ICE Brent futures at the same time.
The Middle East crude oil prices are benchmarks for the official selling prices (OSPs) of the oil of all Middle Eastern producers who price the crude they sell to Asia—their most-coveted market—against the Dubai and Oman benchmarks.