Brent v Dubai

It has been an extremely bearish start to the year for the Dubai crude complex, with the forward curve flirting with contango the entire time. The monthly Dubai spreads have weakened to -10c/bbl at one point, but seems unable to sustain the contango structure. The physical has been very weak, with the physical premium sinking to -61c/bbl, following Saudi Aramco cutting OSPs to Asia, which was for the third consecutive month. Over Christmas, we saw screen buying of Brent/Dubai, especially during weaker physical windows. The Bal-Jan’26 Brent/Dubai has moved up to $1.70/bbl, while Feb’26 has surpassed $0.80/bbl. The only real sellers include Chinese players, and it was well bid by trade houses and majors. At higher levels, we saw producer selling and profit taking on screen. Meanwhile, the Bal-Jan/Feb’26 Dubai spread saw heavy selling interest from trade houses, falling from around -$0.05 to -$0.50/bbl since the new year. For the prompt, the typical pattern is Dubai spreads being sold off in the mornings, then being bid on screen and ending the trading day around flat, so price action has been fairly volatile.

The leading headline in the Dubai market has been the entire Dubai spread structure falling into contango on 16 Dec (time of writing). Jan/Feb’26 Dubai dropped into the negatives, from 21c/bbl on 09 Dec to -7c/bbl on 16 Dec. With this, there has also been a flurry of spread selling in the January to April’26 region, with April to July’26 being comparatively better bid. Given the growing difference between the two curves, the front Brent/Dubai boxes have come into positive range this week, with Jan/Feb especially well bid, moving around +15c/bbl on 16 Dec; the rest of the box curve is trading around flat.

After a bout of weak interest in the front, we saw combined exchange-traded OI climbing again this week. Jan’26 Brent/Dubai OI rose from sub 61.0mb on 09 Dec to 65.6mb by 11 Dec, sitting just 12% below the 5-year maximum of 74.4mb. Flow-wise, 16 Dec has seen new OTC spread selling, as players appear to be scaling in on this new regime. The fresh interest in the contract seems to be largely from bulls, with net positioning against Onyx in the front Brent/Dubai rising from +1.6mb on 09 Dec to +2.6mb on 12 Dec. This has been spec buying, as trade houses flipped net positive and began adding to their length. Deferred Brent/Dubai has seen strong buying from refiners and majors, although there has been some Chinese selling in this contract due to cargo hedges.

There was an expectation that Brent/Dubai would see a correction due to continued Chinese hedging in Brent/Dubai and strong Asian demand, on account of robust Saudi allocations to Asia. There has, indeed, been speculative buying interest at relatively high levels, but this may be partially due to profit-taking flows. The deferred contracts have been relatively quiet this week, following last week’s strong quarterly buying. Finally, there has been some short covering into the year’s end this week.

Despite limited flows since our last report on 03 Dec, there has finally been an introduction of some volatility in the M1 (Jan’26) Brent/Dubai contract as prices surged 38c d/d from -$0.66/bbl on 08 Dec to -$0.28/bbl on 09 Dec (time of writing). The overall Dubai market has continued to trade at extremely low volumes. However, in deferred Brent/Dubai, the Q2, Q3, and Q4’26 contracts appeared to have found a floor this week. Funds and refiners were on the buy-side of these deferred contracts in decent size, which also injected support in the front. Thus, the outright box structure has remained largely unchanged this week, with Jan/Feb rising from -$0.08/bbl on 02 Dec to -$0.04/bbl on 09 Dec. Dubai spreads have been quiet, with some selling seen in the Jan/Feb/Mar Dubai fly and the Dec/Jan spread. There has been some bank buy-side interest in the deferred boxes, though this has not been particularly aggressive.

Combined exchange-traded open interest in the Jan’26 Brent/Dubai has eased from 55.4mb on 02 Dec to 55.3mb on 04 Dec; this sits more than 25% below the 5-year high of 74.7mb, signalling room for fresh longs. However, net positioning against Onyx turned negative on 05 Dec, as trade houses shifted to selling and refiners trimmed their length. Despite this flow, the entire Brent/Dubai curve has moved higher this week. However, we are in an environment where positioning is low in Brent/Dubai, and thus, will need sustained buy-side interest to maintain this week’s upward move. If no fresh buying comes in, it is likely that we will see the curve revert lower once again. To this point, the low speculative volume and the prolonged lack of any particular trend in Brent/Dubai suggest that a mean reversion is likely in the near term.

We have seen trading volumes remain extremely low in December. This week, the M1 Brent/Dubai remained in its tight range between -$0.90/bbl and -$0.55/bbl, as it has been for most of November, as it moved sandwiched between the 100-day and 200-day moving averages. The bodies on the candles are short and fail to reveal a pattern, but there has been a trend of higher lows d/d this week. On the other hand, the shadows on the candles shifted from being longer underneath the candles to above them. This shows that although there is better buying at the lower end of the range, there is better selling at the upper end. The market is still lacking any concrete directional consensus, with a limited risk appetite clear in the price action. As we approach the end of the year, the current de-risking is reflective of a market averse to further market uncertainty. The forward curve has started to flatten out, with Brent/Dubai contracts sitting between -$0.65 and -$0.35/bbl through most of the 2026 curve. There seems to be little to indicate a breakout without some fundamental changes, or a ceasefire between Russia and Ukraine, although the continued failure of these talks has built in some headline scepticism around the subject. Nevertheless, the current environment suggests a trend toward de-risking.

The M1 Brent/Dubai has coiled into a tight range between -$0.90/bbl and -$0.55/bbl for most of November, standing at -$0.85/bbl at the time of writing on 25 Nov. Trading has been rife with intraday volatility, with the market still lacking any concrete directional consensus…

It has been an extremely quiet week in Brent/Dubai, with risk appetite extremely low. The basic structure of the market has changed very little week by week. Volumes have dropped off again since our last report on 11 Nov, and there has been very little speculative positioning. From the small spec positioning we have seen, there have been some banks and small funds buying and selling, but this has not been unidirectional, and it is quite hard to build a narrative from.

Volumes in the Dubai complex slipped into a lull this week, with Dubai spreads largely shadowing the weak Dated Brent narrative….