Dropping crude prices in US physical market lures buyers in Asia

Amid the price drop, buyers in Asia have booked at least five supertankers since Wednesday, according to fixture reports and people with knowledge of the situation. That’s the equivalent of about 10 million barrels of oil.

Still, the purchases come amid tight inventories and as US shale producers sell crude that starts loading next month, when refineries in North America and Europe wrap up maintenance and are eager to stock up on supplies to take advantage of wider profit margins for making diesel.

WTI loading in November is being offered at a premium of around $7 per barrel to Middle East’s Dubai prices, down from $9 at the end of last month.

The drop in WTI prices is closing the gap with Abu Dhabi’s Murban oil, priced at a premium of $4.25 a barrel to the Dubai marker, according to pricing agency General Index. Murban is often compared with WTI by Asian buyers.

Prices of domestic light sweet to Europe are currently at a premium of about 50 cents a barrel to ICE Brent prices, from about $2 last week. The prices are for cargoes loading in November.