Middle East crude benchmark Dubai fell below $28 a barrel to the lowest since 2004, tumbling with global prices as bulging oil stocks in the US and Europe again highlighted concerns about excess supply, traders said.

 

Global benchmark Brent hit a new 11-year low on Tuesday as the global oil market creaked under the pressure of abundant supply. Turmoil in China's stock markets also triggered losses across the Asia-Pacific region.

 

The weak Dubai price is likely to bolster demand among Asian refiners for crude from the Middle East and Russia, potentially making it difficult for supplies from other regions to head east.

 

Front-month Dubai swaps are at a discount of $4.07 per barrel to Brent crude futures on Wednesday versus a discount of only 97 cents a barrel on July 7, according to Reuters data.

 

"There is a lot of oil in the market and there will be more from Opec," Victor Shum, vice president of IHS Energy Insight said by telephone from Singapore, referring to the possible return of more Iranian supplies once sanctions on exports from the producer are lifted.

 

Spot Dubai was last traded at $27.20 a barrel during the Platts Market on Close (MoC) process, down about $3 from the previous session, traders said.

 

DME Oman futures dropped to the lowest ever since the contract was launched in 2007. March Oman  settled at $27.92, down $2.80.

 

Platts's Dubai and Oman price benchmarks are used by Russia and top producers in the Organization of Petroleum Exporting Countries, such as Saudi Arabia, to value more than 12 million barrels per day of crude exports to Asia. --Reuters