Asia crude: Key market indicators this week

Singapore — The crude oil market in Asia was higher at the start of the week of April 11 after robust economic data over the past week from several key economies, including the US, reflected improving demand fundamentals.

ICE June Brent crude futures was pegged at $63.05/b at 0309 GMT April 12, 34 cents/b higher from the 0830 GMT Asian close April 9.

Middle East crude

** The week ahead will focus on buy and sell tenders for Middle East crude, including Qatar Petroleum's Al-Shaheen tender, post issuance of official selling prices by the region's producers.

** In the week ended April 10, Saudi Aramco, Abu Dhabi National Oil Co and Qatar Petroleum issued OSPs for their respective crude grades. While Aramco raised prices for Asia-bound crude by 20-50 cents/b, ADNOC raised prices by 35 cents/b and Qatar by 5-15 cents/b. OSPs from Iraq's State Oil Marketing Organization and Iran's NIOC are now awaited.

** Market participants will also track the movement of arbitrage barrels from the West, which continue to flow into Asia. As excess supplies plague sellers in West Africa and other regions, Asian buyers may seek cheaper crude over Middle East barrels.

** Indian Oil Corp. bought via tender 8 million barrels of various West African grades, including Nigerian Akpo Blend, Agbami, Forcados and some Gabonese grades for loading in June in the week ended April 10.

** The Dubai cash/futures (M1/M3) spread averaged $1.31/b in the week to April 9 against $1.26/b in the week to April 1.

** Intermonth spreads narrowed during midmorning trade April 12, with June/July pegged at 43 cents/b, down 2 cents/b from the Asia close April 9.

** The June Brent/Dubai Exchange of Futures for Swaps spread was pegged at $3.12/b at midmorning April 12, widening 6 cents/b from the Asia close April 9.

Asia-Pacific region

** Traders will keep an eye on trades for the two June-loading Australia's North West Shelf condensate cargoes in the week, down from three cargoes in the May-loading program.

** The tender results for Qatar's Deodorized Field Condensate will remain in focus, with traders expecting little recovery in differentials amid dented refinery margins and lower operational rates.

** June loading schedules for Australia's Cossack and Papua New Guinea's Kutubu Light are also expected in the week. Differentials for these grades have plummeted into discounts in recent weeks following poor demand and sluggish naphtha cracks.

** For Far East Russian crude, traders will be keen to see if premiums for June loading Sokol crude could maintain the upbeat momentum from the previous cycle.

** Traders will be watching out for the tender results of PetroVietnam Oil's June-loading Chim Sao and Dai Hung crude cargoes. Cash premiums for the Vietnamese grades are expected to dip following weakened demand from Southeast Asia due to the pandemic.

** Tenders for other Vietnamese crude grades, such as Su Tu Den and Thang Long, are expected to emerge in the week started April 11.

Delivered crude

** Pockets of Chinese buying activity for prompt loading cargoes of Brazil's Tupi crude are expected to emerge, with an offer for July-delivery cargo of Tupi at a premium of mid $1s/b over ICE Brent, DES Qingdao, sources said.

** Deals for US WTI Midland crude to Asia remained patchy as cash premiums were largely rangebound. Buyers in Asia continue to favor Middle Eastern crude grades in comparison.

Crude futures

** Demand concerns weighed on sentiment as several countries continue to battle COVID-19 resurgences, although robust economic data from key economies, including the US and Europe, show that long-term recovery is underway for demand-side fundamentals.

** Indirect talks between the US and Iran regarding sanctions relief over the past week, and expected to resume in the week started April 11, may lead to a lifting of sanctions on Iranian oil.

** Meanwhile, serious side effects of the AstraZeneca COVID-19 vaccine have prompted several countries to discourage its use for younger people. Delays in vaccine rollout schedules and supply bottlenecks for alternative vaccines may create a temporary hurdle in the path of an economic recovery.

** In the week ended April 10, the June contract for Brent had slid 2.79% at $63.05/b, whereas the May contract for NYMEX light sweet crude fell 3.47% at $59.32/b.