Saudi Arabia's move to increase oil output dampened sentiment across the Middle East crude market on Monday as the Dubai swaps curve flipped into contango for the first time this month, indicating higher availability of prompt supply.
The Brent/Dubai Exchange of Futures for Swaps (EFS) jumped to an intra-day value of almost $8 a barrel in late trade, the highest since 2005, another sign that supplies of heavy sour crude are expected to remain ample in the months to come.
A contango, or a price structure where prompt oil is cheaper than for later delivery, set in for the first two months of the Dubai swaps curve, with July 11 cents cheaper than August as its expiry neared and August one cent cheaper than September.
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