Asia crude oil: Key market indicators for Oct 18-22
Crude oil markets started the Oct. 18-22 trading week on a bullish note as the supply-demand outlook remained supportive for prices amid a continued easing in pandemic movement and border restrictions around the world, while investors weighed the possibility of a return of Iranian oil.
ICE December Brent crude futures stood at $85.80/b at 0300 GMT Oct. 18, up 94 cents/b (1.11%) from the Oct. 15 settlement.
Middle East crude
** Spot trading activity for December-loading barrels was expected to remain strong amid healthy demand from major Asian economies such as India, China, Japan and South Korea.
** A widening Brent/Dubai spread could reduce arbitrage barrels from the West, boosting spot differentials for various Middle East grades, which have flipped from discounts last month to premiums in October.
** Trade for Russian ESPO Blend crude will remain in focus amid strong buying interest from China’s independent refineries. Three December-loading cargoes offered by Surgutneftegaz were heard traded at premiums of around $5-$5.5/b to Platts front-month Dubai crude assessments.
** Dubai cash/futures (M1/M3) averaged $2.28/b in the week ended Oct. 15, and $2.14/b in the week ended Oct. 8
** Intermonth spreads were steady during mid-morning trade Oct. 18, with December/January pegged at 92 cents/b, higher than at the Asian close Oct. 15.
** The December Brent/Dubai Exchange of Futures for Swaps was pegged at $4.07/b mid-morning Oct. 18, down 2 cents/b from the Asia close Oct. 15.
** Market participants are awaiting clarity on tender results from Asian key condensate buyer Indonesia’s Pertamina, where resilient naphtha cracks on month could buoy light sweet condensate sentiment.
** For Qatari condensates, details on tender results for Qatar’s LSC are expected to emerge this week.
** Trading activity for Far East Russia’s Sakhalin Blend was expected to emerge, with higher expectations for cash premiums this month amid a wider Brent-Dubai EFS.
** Trade details for December-loading barrels of Papua New Guinea’s Kutubu Light and Australia’s Ichthys condensate will be in focus this week.
** In Southeast Asia, traders will be looking out for results of Brunei Energy’s Kimanis tender, spot trading activity across the Malaysian crude grades in the MCO basket, and the tender results of PetroVietnam Oil’s spot Chim Sao and SV-DN crudes amid bullish gasoil and jet fuel product cracks.
** Traders will monitor trade activities for Sudan/South Sudan’s November loading Nile Blend, for which details are expected to emerge this week.
** On OSPs, traders may see November Malaysian Crude Oil official selling price differentials toward the end of this week.
** Traders will be keeping an eye on the term tender results from Taiwan’s CPC for WTI Midland crude, as well as its monthly sweet crude tender details later this week.
** Cash differentials for January-arrival cargoes of Brazilian Tupi crude are expected to remain supported amid tight supply and clarity on the 4th batch of Chinese import quotas.
** Crude oil prices continue to climb as sentiment remains supportive on the back of border re-openings around the world and high LNG and coal prices continue to prompt energy suppliers to switch to oil.
** Investors will be eyeing Iranian talks that are set to resume this week, about four months after negotiations were delayed as a new ultra conservative administration took office.
** Analysts said the likelihood of a return of Iranian oil to global export markets was unclear. “The timeline for more crucial diplomacy with the US remains unclear, but we still put the odds of an eventual deal just above 50-50,” Paul Sheldon, Platts Analytics chief geopolitical adviser, said Oct. 15. “However, we acknowledge that Iran may no longer seek a deal under any realistic conditions.”
** With oil prices hovering at such lofty heights, markets watchers have said this will likely prompt a sharp return in production, particularly in the US, threatening the medium-term outlook for oil.
** The US oil rig count has climbed almost continuously since hitting a pandemic low of 172 on Aug. 14, 2020, data from oil services firm Baker Hughes showed. The latest US oil rig count stood at 445 as of Oct. 15, up 12 on the week.
** In the week ended Oct. 15, the December contract for ICE Brent crude futures rose 3% on the week to settle at $84.86/b, while the November contract for NYMEX light sweet crude was up 3.69% at $82.28/b.