Asia crude: Key market indicators this week
Asia’s crude oil market started the week of April 19 lower, as sentiment turned cautious in light of the uptick in COVID-19 cases in key European and Asian economies following the release of bullish data and improved demand forecasts last week ended April 16.
June ICE Brent crude futures was pegged at $66.57/b at 0250 GMT on April 19, 41 cents/b lower from the 0830 GMT Asian close on April 16.
MIDDLE EAST CRUDE
**Dubai cash-futures, or M1-M3 averaged $1.16/b in the week ended April 16, against $1.31/b in the week ended April 9.
**Intermonth spreads narrowed during mid-morning trade April 19 with June-July pegged at 47 cents/b, down 4 cents/b from the Asia close on April 16.
**June Brent-Dubai Exchange of Futures for Swaps was pegged at $3.04/b at mid-morning April 19, up 2 cents/b from the Asia close on April 16.
**The week ahead will focus on tenders for various Middle East crude grades although activity could ease as the week progresses and trade for June-loading barrels near completion.
**Last week ended April 16, several Middle East crude traded via a slew of tenders issued by regional producers and Asian refiners. Key Al-Shaheen crude tender saw Qatar Petroleum awarding two June-loading cargoes to China’s Rongsheng and one cargo to Exxon at Dubai plus around $1.20/b. The producer also sold a cargo each of June-loading Qatar Land and Qatar Marine crude to unknown buyers.
**China’s Rongsheng bought 3 million barrels each of Abu Dhabi’s Murban and Upper Zakum crude for June-loading, while India’s IOC bought 1 million barrels each of June-loading Das Blend and Upper Zakum crude along with 5 million barrels of various Nigerian crude grades.
**Russia’s Surgutneftegaz sold three June-loading cargoes of ESPO Blend crude at Dubai plus around $2.30-$2.50/b to Shell, Vitol and Mitsui. The outcome of a separate tender that closed April 16, in which it offered five more cargoes of June-loading ESPO, is awaited.
**The outcome of Iraq’s State Organization for Marketing of Oil tender offering 1 million barrels of May-loading Basrah Medium crude, which closed April 17, is awaited.
**Market participants will also keep an eye on demand from Asian buyers as several countries such as India, Japan and Thailand deal with fresh COVID-19 outbreaks, leading to stringent lockdowns and mobility curbs.
ASIA PACIFIC CRUDE
**Traders will keep an eye on trading for Australia’s North West Shelf condensate over the April 19-23 week as sentiment could improve due to fewer overhang condensate cargoes, despite weaker naphtha crack spreads on the month.
**Traders will be looking out for trades on Papua New Guinea’s Kutubu Light this week with Oil Search holding two cargoes for June 12-16 and June 30-July 4 loading.
**Traders will be looking out for the outcome of Brunei Energy’s Kimanis tender and trades of other Malaysian grades, following the outcome of ConocoPhillips’ tender where premiums dipped to around $1/b against Dated Brent. Sentiment is expected to remain bearish as demand centers in Asia experienced a surge in COVID-19 cases.
**Traders will be watching for the tender results of PetroVietnam Oil’s Ruby, Su Tu Den, and SV-DN crude, which closed on April 16. Cash premiums for Vietnamese grades are expected to dip on the month following weakened Southeast Asia demand amid the coronavirus pandemic, coupled with continued availability of arbitrage barrels.
**Market participants are awaiting outcome of Vietnam’s Binh Son Refinery’s spot and term tenders, both validities expired on April 16.
**Traders will keep a close watch on trading of Australia’s Vincent May-loading cargo April 19-23, as the cyclone in North West Australia dents loading and production activities. Limited availability of Pyrenees barrels could offer some support to Vincent crude’s price amid rangebound marine fuel oil cracks.
**Market participants will keep a lookout for fresh tenders from Thailand’s PTT and Taiwan’s CPC Corporation for July delivered sweet crude April 19-23. The US’ WTI Midland crude could face competition from alternative arbitrage barrels.
**Sentiment for Brazil’s Tupi crude is likely to remain subdued following scant Chinese seaborne buying interests for July arrival cargoes, as firm buying indications remained lackluster.
**Crude oil futures started the April 19-23 week on the back of a confluence of bullish factors, including signs of improved economic conditions in the US and China, an improvement in the demand outlooks of OPEC and International Energy Agency and a rapidly weakening US dollar.
**Market is concerned over the prevalence of the pandemic in parts of Asia and Europe. India, in particular, has the market worried as the country reported a record high 261,394 cases on April 17, latest John Hopkins University data showed.
**China’s Q1 GDP grew 18.3% and the US’ March retail sales jumped 9.8%, shoring up sentiment for oil as a rebound in economic activity is expected to be accompanied by an increase in oil and energy demand.
**On April 13 OPEC raised its 2021 crude oil demand forecast by 190,000 b/d from the March estimate to 96.46 million b/d, up 5.95 million b/d year on year. After which the IEA said 2021 global oil demand will grow 230,000 b/d faster than previously forecast, expanding 5.7 million b/d to 96.7 million b/d.
**Over April 12-16, a weakened US dollar provided tailwind to the market, with the June contract for the ICE Dollar Index falling 1.62% to close at 91.544 on April 16.
**Over April 12-16, the June contract for Brent jumped 5.91% higher to $66.67/b, whereas the May contract for NYMEX light sweet crude rose 6.42% to $63.13/b.
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