Oman crude oil trading on the Dubai Mercantile Exchange last month maintained its narrow range since the start of the year, but held comfortably above the US$100 a barrel mark as geopolitical concerns and production shortfalls underpinned prices.
The DME May Oman crude contract settled at $105.04 per barrel, down $0.17 from the closing February price of $105.27, when the April contract settled.
The monthly average of the DME, which is used by Oman and Dubai to set their official selling price was $104.36 a barrel, slightly down from $105.04 in February.
The month started on a firm footing with the political crisis in Crimea pushing Oman prices to a two-month high of more than $107, and the tense stand-off between Russia and the United States and European Union remained a key feature of the oil markets throughout the month.
These tensions also look set to dominate the new front-month June contract, which late on Monday was trading at about $104.60.
However, the authoritative commodities strategies report from Citibank noted that while Europe was heavily dependent on Russian oil and gas, Moscow was equally dependent on Europe for revenues.
“Russia is a petro state, with more than 50 per cent of the revenues needed to finance the government coming from oil and gas exports. With largely stagnant oil and gas production and increasing revenue requirements, the government’s main vulnerability is its dependence on market prices to balance its budget,” said the Citi report on Monday.
Additionally, continuing supply disruptions in Libya and Nigeria also provided a level of support for oil prices throughout March. Otherwise, Chinese demand continues to increase, while sustained cold weather in the US drained stockpiles and supported the American crude market.
The Brent/Oman spread, which is a key indicator of relative East/West crude oil values, was also stable over the month, holding at about $3.
Paul Young is the head of energy products at DME
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