Asia crude – Key market indicators this week

The crude oil market in Asia started the week of Nov. 2 lower as rising COVID-19 cases threatened to further cap the demand recovery for transport fuel, while supply uncertainty lingers around OPEC+ cuts from January onwards.

The new prompt-month January ICE Brent crude futures was pegged at $36.82/b at 0200 GMT Nov. 2, down $1.43/b from the Asian close on Oct. 30, Platts data showed.

MIDDLE EAST CRUDE

**The sour crude market awaits the release of fresh December OSPs in the week starting Nov. 2.

**Views were mixed around Saudi Aramco’s upcoming official selling prices for December, with market expectations ranging from mild cuts, rollovers and mild increases from November prices.

**Dubai cash-futures, or the M1-M3, spread, averaged minus 67 cents/b in October, down from the minus 53 cents/b in September.

**Uncertainty surrounds whether the demand recovery in October is sustainable and persists into November.

**The prompt December-January Dubai crude futures timespread was pegged at minus 30 cents/b at 0200 GMT Nov. 2. The prompt January Brent-Dubai Exchange of Futures for Swaps was pegged at minus 3 cents/b mid-morning Nov. 2.

ASIA PACIFIC CRUDE

**In the condensates market, participants will be looking out for fresh January-loading program for Australia’s’ North West Shelf condensate in the week beginning Nov. 2, traders said. Market expects price differentials for January loading condensates to be lower as product margins are starting to weaken and demand has yet to recover, traders added.

**The January loading program for light crudes, including Cossack and Kutubu Light, are also expected in the week beginning Nov. 2, traders said.

**In the Far East Russian market, India’s ONGC is expected to offer January loading cargoes of Sokol crude in the week beginning Nov. 2 via tender, the results of which would set the precedence for price differentials of middle distillate-rich crudes in November, traders said.

**Official selling prices for December loading cargoes of Malaysian and Indonesian crudes are also expected this week, traders said.

DELIVERED CRUDE

**In the delivered crude market, spot trade activity is expected to pick up this week as Chinese independent refiners are expected to buy more, traders said.

**For Brazilian Lula (Tupi) crude, offers were last heard at a premium of around $2/b to March ICE Brent Futures for January delivered crude, while trade indications for the same were around $1.60-1.70/b to match ICE Brent Futures, trader said.

**For the US WTI Midland crude, trade indications for January delivered crude were in the high $1s/b-$2/b to Platts Dated Brent on a DES basis, traders said. Market participants will be looking out for fresh indications for February delivered crudes this week.

CRUDE FUTURES

**Sentiment in crude oil markets is likely to remain bearish this week, after UK Prime Minister Boris Johnson announced on Oct. 31 that the country will retreat into another nationwide lockdown, following the precedent set by France and Germany earlier on Oct. 28, and since production in the US Gulf Coast will pick up speed following the dissipation of Hurricane Zeta.

** The January contract for Brent and the December contract for WTI had fallen 9.82% and 10.19% in the week ended Oct. 30 to settle at $37.94/b and $35.79/b, respectively on Oct. 30., as the markets grappled with demand-side implications of a surge in coronavirus infections and tightening restrictions in the west.

**Fears of oversupply also weighed the market down after the ceasefire between Libya’s Government of National Accord and the Libyan National Army virtually guaranteed that the country’s oil production will recover to near pre-conflict levels soon. Libya’s National Oil Corp said on Oct. 23 that oil output from the country could reach 1 million b/d by mid-November.

**Market analysts insist that only a supply-side response from the OPEC+ can provide some assurance to the markets. In particular, official word from the alliance that it is reconsidering the 2 million b/d increase in production quotas scheduled for 2021 onwards may boost sentiment.
Source:Platts