Asia crude – Key market indicators this week
Crude oil market in Asia was trading higher at the start of the week of Feb. 22, as the strong market outlook prompted traders to pick up bargains.
April ICE Brent crude futures was pegged at $63.61/b at 0317 GMT Feb. 22, up $1.01/b from the 0830 GMT Asian close on Feb. 19.
MIDDLE EAST CRUDE
**Trade activity this week is likely to ease as demand from Asian buyers show signs of slowing as the trade cycle for April-loading barrels nears its end.
**A spate of buy-sell tenders dominated trade activity in the week of Feb. 15-19 as Chinese refiner Rongsheng bought 2 million barrels of Murban crude, while Thailand’s IRPC bought a cargo each of April-loading Banoco Arab Medium and Murban crude.
**Market will be on the lookout for the outcome of Indian MRPL’s tender, which closed Feb. 19, seeking 1 million barrels of sour crude. Last week, IOC was heard to have bought 5 million barrels of West African crude, highlighting the threat of cheaper arbitrage barrels from the West.
**Market will also be eyeing fresh trades for Far East Russia’s ESPO Blend crude, which traded higher than expected premiums of around $1.80-$2/b against Platts Dubai crude assessments the previous week.
**Dubai cash-futures (M1-M3) averaged 89 cents/b in the week ended Feb. 19, against 73 cents/b in the week ended Feb. 11.
**Intermonth spreads widened during morning trade Feb. 22 with April-May pegged at 56 cents/b, up 2 cents/b from the Asia close on Feb. 19.
**April Brent-Dubai Exchange of Futures for Swaps was pegged at $2.61/b mid-morning Feb.22, up 6 cents/b from Feb. 19 close.
ASIA PACIFIC CRUDE
**Tender results from Vietnam’s PV Oil’s Chim Sao and Ruby crudes are likely to emerge this week, together with the issuance of other Vietnamese grades such as Su Tu Den and Thang Long, and spot trades for April-loading Malaysian crude oil cargoes.
**Trading activity for Far East Russia’s Sakhalin Blend are expected to kick off this week for May-arrival barrels, while traders are on the lookout for subsequent trades for Sokol crude following the last trade at a premium of $1.85/b versus Dubai, CFR North Asia.
**Market will seek clarity on the outcome of Qatar’s Deodorized Sulfur Condensate spot tender and Low Sulfur Condensate term tender, which closed on Feb. 15 with next day validity.
**Traders will keep a close watch on trades for Australia’s Cossack and Papua New Guinea’s Kutubu light sweet condensates in the April loading program.
**For the heavy sweet crudes, traders will eye trade activity for Nile Blend and Dar Blend as well as trades for April-loading Australia’s Vincent cargo, where a March-loading cargo was last heard traded at Dated Brent plus around $11.50/b, FOB.
**Traders may seek clarity on Pertamina’s condensate tender results for April 10-26 delivery, as there could be a third 650,000-barrel cargo of Australia’s North West Shelf condensate concluded at $3s/b to Platts Dated Brent assessment, CFR. Traders will also keep track for trades in the April-loading cargoes for the condensate.
**Traders await deals for Brazilian Tupi crude following an uptick in Chinese seaborne procurement interests after the Lunar New Year holidays, and as offers for May-delivered Tupi cargoes rose to premiums of $3s/b against ICE Brent, DES Qingdao, from high-$1s/b to $2/b previously.
**The issuance of fresh tenders from Asian refiners including Thailand’s IRPC and Taiwan’s CPC Corporation for May delivered US WTI Midland crude are awaited. Spot differentials for the grade could rise amid supply tightness due to the recent winter storm in Texas. CPC was last heard to have purchased WTI Midland for April delivery at a premium under $2/b to the Platts Dated Brent crude assessment, CFR Taiwan.
**Front month ICE Brent crude futures likely to continue trading above $60/b support level this week, even as supply disruptions amid cold snap in parts of the US.
**Improving demand outlook continues to be key pillar of support in crude oil markets, with substantial progress in vaccine rollouts and expectations of an upcoming US stimulus package underpinning hopes of economic recovery.
**OPEC+ alliance’s March 4 meeting, in which April production quotas are expected to be discussed, is of significant interest to the market. Analysts generally expect gradual rollbacks of supply cuts amid the currently well-supported crude oil prices, with OPEC+ expected to take a conservative approach to avoid shocking markets.
**Crude oil futures were rangebound during the week ended Feb. 19, as the initial boost received from supply disruptions in the US mellowed out by the end of the week. The April contract for Brent had ended the week 0.77% higher at $62.91/b, whereas the March contract for NYMEX light sweet crude dipped 0.39% to $59.24/b.