Asia crude oil: Key market indicators this week

Trade activity in the Middle East crude oil market in the week of May 24 could ease following completion of July-loading procurements from Asian refiners as the focus shifts to next month’s trading cycle.

July ICE Brent crude futures were pegged at $66.90/b at 0200 GMT May 24, $2.12/b higher from the 0830 GMT Asian close on May 21.

Middle East crude

**Middle East crude oil market trades ticked higher amid a spate of buy-sell tenders by regional producers and Asian refiners. Qatar Petroleum sold July-loading Al-Shaheen crude, Qatar Land and Qatar Marine at premiums to Platts front-month Dubai crude assessments.

**Strong buying activity were also seen from China’s Rongsheng, which purchased a slew of Middle Eastern crude grades for delivery in July and August.

**Taiwan’s CPC bought July-loading Upper Zakum crude, while Thailand’s IRPC bought Murban crude at premiums Platts front-month Dubai crude assessments.

**Crude spot differentials are likely to ease with lighter grades trading at nominal premiums, while medium and heavy grades could trade near parity, or at discounts.

**Reported outbreaks of COVID-19 cases in Asia continue to limit crude oil import appetite, as Indian crude demand turned weaker.

**Dubai cash-futures (M1-M3) averaged $1.17/b in the week ended May 21, against $1.01/b in the week ended May 14.

**Intermonth spreads were higher during mid-morning trade May 24 with July-August pegged at 39 cents/b, up 6 cents/b from the Asia close on May 21.

**July Brent-Dubai Exchange of Futures for Swaps was pegged at $2.86/b mid-morning May 24, 4 cents/b lower from the May 21 close.

Asia Pacific crude

**Market participants will be watching out for Australia’s North West Shelf condensate cash premiums from the tender results of Indonesia’s TPPI August-delivery cargoes.

**The outcome of Qatar’s QPSPP’s tender for July-loading DFC and LSC is awaited following stronger demand from Northeast Asian refineries post turnaround season.

**On Far East Russian crude, traders await results from India’s OVL’s second Sokol tender in the July trading cycle, as well as trades for Sakhalin Blend to kick off this week.

**Traders will keep a lookout on any possible deal for Papua New Guinea’s Kutubu Blend this week, and trading activities for July loading Australia’s Ichthys condensate is also in focus after the scheduled maintenance which takes place from mid-May to mid-June.

**Traders will be looking out for spot trades of Malaysian crude grades such as Miri Light, Kikeh and Labuan. Sentiment for Malaysian crude edged higher following ConocoPhillips’ tender results amid resilient product crack spreads.

**Traders will be keeping a lookout for any sell tenders from Vietnam’s PetroVietnam Oil, where the tender results for July-loading Bunga Orkid crude are also expected to emerge this week.

**On regional Official Selling Prices, market participants will be awaiting Malaysia’s June MCO OSP differentials and Brunei’s March OSP this week.

Delivered crude

**Market participants will be looking out for trades of August-arrival Brazil’s Tupi crude amid healthy demand from China and limited spot availability for the Asian market.

**Traders are keeping an eye out for fresh tenders from Taiwan’s CPC Corporation for August-delivered sweet crude, as well as the results of Thailand’s PTT’s sweet crude tender for indications on the US’ WTI Midland crude prices.

Crude futures

**The oil market has its eyes set on the fifth round of the Joint Comprehensive Plan of Action negotiations, which resume in Vienna this week. The restoration of the JCPOA could lead to Iran increasing oil production to pre-sanctions levels of about 3.9 million b/d next year, according to analysts.

**Concerns over an influx of additional Iranian barrels following the restoration of the JCPOA drove price action in the week ended May 21, with the July contract for ICE Brent crude futures falling 3.3% to settle at $66.44/b on May 21, whereas the July contract for NYMEX light sweet crude fell 2.72% to $63.58/b.

**Indian demand remains bearish with its oil imports ticking up in April despite reduced crude throughput, while the demand outlook for the US and Europe remain optimistic amid strong economic data.
Source: Platts