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Asia crude oil: Key market indicators for Aug 2-6

Crude oil futures ticked lower in mid-morning trade in Asia Aug. 2 from the July 30 Asian close after OPEC+ on Aug. 1 increased production levels by 400,000 b/d.

ICE October Brent crude futures were pegged at $74.26/b at 0200 GMT Aug. 2, down 83 cents/b from the 0830 GMT Asia close July 30.

Middle East crude

** Focus in the coming week is on the release of official selling prices by Middle East producers such as Saudi Aramco and Qatar Petroleum as trade for October-loading crude commences.

** Abu Dhabi National Oil Co. or ADNOC has issued its OSPs based on the Murban Futures contract on the ICE Futures Abu Dhabi exchange. The price for Murban was set at $73.50/b. The September OSP differential to Murban for Umm Lulu was set at plus 5 cent/b, for Das Blend at a discount of 30 cents/b and for Upper Zakum at a discount of 80 cents/b.

** Spot buying activity for October-loading crude is likely to be steady and led by key economies such as India and Japan. COVID-19 outbreaks in Thailand and Indonesia could curb crude demand from those countries, while China’s appetite could be limited by import quota limits on independent refineries.

** Dubai cash/futures (M1/M3) averaged $2.03/b in the week to July 30 and $2.12/b in the week to July 23. For the month of July, the Dubai cash/futures spread strengthened in backwardation to average $2.35/b, up from $1.88/b in June.

** The intermonth spread was lower during mid-morning trade Aug. 2, with October-November pegged at 80 cents/b, up 3 cents/b from the Asia close July 30.

** The October Brent/Dubai Exchange of Futures for Swaps was pegged at $3.95/b mid-morning Aug. 2, up 2 cents/b from the Asia close July 30.

Asia-Pacific crude

** For ultra-light sweet condensates, cash premiums for Australia’s North West Shelf condensate ticked higher in the week to July 30 amid pockets of demand, although light sweet grades such as Wheatstone and condensates from other origins remain available on the market.

** A fresh trading cycle for Far East Russian grades commences this week, with market participants awaiting tenders for October-loading barrels.

** Traders are looking to ascertain trade details for Australia’s Cossack; Thailand’s PTT was heard to have purchased a September-loading cargo amid an uptick in naphtha cracks.

** For Malaysian crudes, traders will be looking for any further spot trades of grades such as Miri Light, Kikeh and Labuan after sluggish regional crude demand was heard to have reduced refinery run rates.

** Trading activity for Australian heavy sweet crudes including Vincent, Pyrenees and Van Gogh remain in focus, with marine fuel cracks remaining largely stable on the month.

** For regional OSPs, market participants will be awaiting announcements of July Malaysian Crude Oil (MCO) prices, Brunei’s June OSP and Indonesia’s July Indonesian Crude Prices this week.

Delivered crude

** Trading activity for US WTI Midland crude into Asia remains in focus following CPC Taiwan’s procurement of 2 million barrels of the crude for October delivery at lower cash premiums on the month.

** Chinese demand for November-arrival cargoes of Brazilian Tupi crude is expected to remain slow amid limited import quotas, prompting sellers to focus their sales efforts on the West.

Crude futures

** Crude oil futures enter the week amid uncertainty over the trajectory of prices. While demand fundamentals remain strong, there are some concerns this will not last as COVID-19 infection numbers in parts of the world continue to rise.

** OPEC+ increased production by 400,000 b/d Aug. 1 as per the agreement struck on July 18. Market analysts generally expect robust demand to absorb this output increase, but it could nevertheless cause a short-lived pullback in oil prices.

** International crude oil benchmarks recorded gains in the week to July 23 on the back of a weakened US dollar and strong US demand data from the Energy Information. Administration. The October contract for ICE Brent futures rose 2.68% on the week to settle at $75.41/b July 30, while the September contract for NYMEX light sweet crude rose 2.61% to $73.95/b.
Source: Platts

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