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Asia crude oil: Key market indicators for Jan 10-14

Crude oil futures are expected to maintain their bullish momentum in the week of Jan. 10 despite rising COVID-19 cases worldwide, as investors remained confident that the longer-term outlook for oil demand and supply will likely be tight.

ICE March Brent crude futures stood at $81.89/b at 0200 GMT Jan. 10, up 14 cents/b, or 0.17%, from the Jan. 7 settlement.

Middle East Crude
** Market participants will be watching out for official selling prices from other Middle East producers like Iraq’s SOMO this week; after which spot activity for March-loading crude kicks off.

** Saudi Aramco issued OSPs for February with lower-than-expected $1/b-$1.30/b cuts across its Asia bound crude grades. The drop in prices is expected to make term barrels expensive and give spot trade a boost.

** Spot demand among Asian buyers looks stable this month though the growing spread of COVID-19 cases in China, Japan and India could limit buying appetite as mobility curbs weigh on consumption of oil and products. Japan’s upcoming seasonal refinery maintenance is also likely to limit crude import volumes.

** Dubai cash-futures averaged $1.77/b in the week ended Jan. 7, against 85 cents/b in the week ended Dec. 31.

** Intermonth spreads were narrower mid-morning Jan. 10 with March-April pegged at 63 cents/b, up 1 cent/b from the Asia close Jan. 7.

** March Brent-Dubai Exchange of Futures for Swaps was pegged at $3.65/b mid-morning Jan. 10, down from $3.72/b from the Asia close Jan. 7.

Asia Pacific Crude
** Trading activity in the Asia Pacific sweet crude market is expected to kick off following the issuance of Australia’s North West Shelf condensate loading program for March; participants also awaiting Pertamina’s buy tender activity.

** Market participants awaiting tender activity for March-loading Far East Russia’s Sokol crude amid a wider on the month Brent-Dubai Exchange of Futures for Swaps.

** The March loading programs for Australia’s Ichthys Field Condensate, Cossack and Papua New Guinea’s Kutubu Blend are expected to emerge later this week.

** Regional crudes market will look out for Malaysia’s March-loading Kimanis crude program and spot tenders from Vietnam’s PV Oil, which could give fresh cues on near-term supply.

** Heavy sweet crudes market awaiting trades for Australia’s February-loading Van Gogh, while awaiting clarity on trade details for Vincent and Pyrenees.

** The February loading program for Sudan/South Sudan’s Dar Blend is also anticipated; the crude could trade higher amid resilient LSFO cracks.

Delivered Crude
** Arbitrage flow of US’ WTI Midland crude into Asia could remain thin as the WTI-Brent spread narrows on the month.

** Trading activity for April delivery cargoes of Brazil’s Tupi crude is expected to emerge for procurement post-Lunar New Year.

Crude Futures
** China is battling another outbreak of COVID-19 infections across several states, with the latest being a cluster in the northern city of Tianjin that included two omicron cases. Cases in India have surged in the last week, while in the US, caseloads have remained at critically high levels.

** In the week ended Jan. 7, the international crude oil benchmarks were higher with the March contract for ICE Brent futures up 5.1% on the week to settle at $81.75/b, while the February contract for NYMEX light sweet crude was 4.9% higher at $78.90/b.
Source: Platts

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