Asia crude oil: Key market indicators for June 28-July 2
In the week of June 28-July 2, crude oil will continue its climb as market sources expect the OPEC+ coalition to announce only a marginal increase in production quotas in August.
August ICE Brent crude futures were pegged at $76.07/b at 0200 GMT June 28, 35 cents/b higher from the 0830 GMT Asian close on June 25.
Middle East Crude
** Market participants await the issuance of August official selling prices with a price hike for lighter crude grades on the back of a stronger sour complex this month.
** India’s crude demand is in focus amid some COVID-19 recovery, while Chinese demand may stay capped amid less-than-expected import quotas issued.
** Dubai cash-futures (M1-M3) averaged $1.86/b in the week ended June 25, against $2.09/b in the week ended June 18.
** Intermonth spreads were higher during mid-morning trade June 28 with August-September pegged at 77 cents/b, up 3 cents/b from the June 25 Asia close.
** August Brent-Dubai Exchange of Futures for Swaps was pegged at $4.07/b mid-morning June 28, up 8 cents/b from the June 25 Asia close. On June 22, front month EFS was assessed at $4.09/b, the highest since Sept. 17, 2019 when it was assessed at a premium of $4.16/b.
Asia Pacific Crude
** Market participants will be looking out for trades on remaining Australian North West Shelf condensate and Cossack cargoes from the August loading program, amid recovering naphtha cracks.
** Traders will be keeping a keen eye for any Far East Russian Sokol offers from Russia’s Rosneft Oil and Tokyo-based Sakhalin Oil and Gas Development Co, after India’s OVL sold August-loading Sokol crude at more than a 16-month high amid a wide Brent Dubai Exchange of Futures for Swaps.
** The market anticipates deals done for Malaysia’s Miri and Kikeh crude in the Malaysian Crude Oil basket, following stronger demand and sentiment as cash premiums surged following trades in Kimanis and Labuan.
** Trading activity for Australia’s August-loading Vincent and Van Gogh crudes are expected to emerge amid recovering marine fuel oil cracks.
** This week, the market expects Malaysia’s June MCO OSPs, Indonesia’s June ICP and Brunei’s March/April OSPs to be announced.
**Traders are eyeing more US WTI Midland crude trades to Asia, following a higher deal done on the month by Taiwan’s CPC Corporation for September delivery barrels.
**Traders will evaluate if Chinese buying sentiment for Brazilian Tupi crude is sustainable following a September delivery deal done higher on the month.
** The July 1 OPEC+ meeting is expected to provide guidance into the coalition’s production plans for August.
** With oil demand growth set to outpace supply, the producer group has met with repeated calls to raise production in order to prevent surging energy prices from undermining global economic recovery. Yet analysts expect OPEC+ to only temper the rise by around 500,000 b/d in August. The group has been cautious to prevent an oversupply in the market under the leadership of Saudi Arabia.
** Analysts have said that reason for OPEC+ restraint include the spread of the more transmissible Delta variant of the coronavirus, and the possible return of additional Iranian barrels following a deal on the Joint Comprehensive Plan of Action, even though progress on that front remains elusive.
** The oil complex remains supported by a rosy demand outlook as vaccination rates around the world rise, and as countries roll back mobility restrictions. With the thrust provided by rising demand, the August contract for ICE Brent futures rose 3.63% on the week to settle at $76.18/b on June 25, whereas the August contract for NYMEX light sweet crude rose 3.87% to $74.05/b.