Asia Crude: Key market indicators this week

Singapore — Asia's crude oil market started the week of April 26 on a stronger note amid signs of easing COVID-19 impact in the West, even as resurgence in Asia raised demand concerns. Market participants continue to expect OPEC+ to go ahead with its plan of rolling back production cuts in its upcoming April 28 meet.

June ICE Brent crude futures was pegged at $66.11/b at 0200 GMT on April 26, 64 cents/b higher from the 0830 GMT Asian close on April 23.

MIDDLE EAST CRUDE

** Trading activity is expected to ease further in the week as demand from Asian buyers remains dormant amid fulfilment of purchase requirements while focus shifts to the next trading cycle.

** In the week ended April 23, Thailand's IRPC bought 1 million barrels of June-loading Das Blend crude at a premium of $1.40/b to Platts Dubai while Taiwan's CPC bought two to three 500,000 barrel cargoes of June-loading Upper Zakum crude. The crude was purchased at a premium of around $1.20/b to Platts Dubai.

** Iraq's SOMO sold 1 million barrels of May-loading Basrah Medium crude, via tender, at a premium of around 30-40 cents/b to the grade's official selling price. The cargo was heard sold to Litasco.

** Outcome of a tender issued by India's HPCL is awaited. The refiner issued a tender seeking end-May early-June loading cargoes of Abu Dhabi crude as well as West African crude. The tender closed April 23.

** Dubai cash/futures (M1/M3) averaged $1.02/b in the week ended April 23, against $1.16/b in the week ended April 16.

** Intermonth spreads was rangebound in mid-morning trade April 26, with June/July pegged at 46 cents/b, flat from the Asia close April 23.

** The June Brent/Dubai Exchange of Futures for Swaps was pegged at $3.50/b at mid-morning trade April 26, down 1 cent/b from the Asia close April 23.

ASIA PACIFIC CRUDE

** In the condensate markets, results of China's Fuhaichuang's tender seeking condensates for July delivery are awaited. With June-loading Qatari condensates no longer being heard offered in the market after trading earlier, some expect grades such as Alba, Alen or Pluto to be purchased through this tender.

** Additionally, market participants are looking forward to the outcome of Petronas' tender offering Cakerawala condensate for June loading and PV Oil's tender offering Hai Thach condensate for term loading over June-December 2021.

** On Malaysian crude, sentiment has dampened after both of ConocoPhillips' cargoes were heard traded at a premium of low-$1s/b to Dated Brent, and Brunei Energy's tender was heard awarded at a discount of 30 cents/b to June MCO OSP, reflecting softer cash differentials month-on-month. Demand concerns amid COVID-19 resurgence in several Asian countries have resulted in the weakening sentiment for regional crude grades, sources said.

** In other regional crudes, traders will be watching out for the tender results of PV Oil's term loading Su Tu Den and Te Giac Trang crude, as well as June-loading heavy Bach Ho crude. Eyes will also be on Indonesia's Pertamina's tender seeking crude for delivery over June-July, and spot trades for Banyu Urip crude.

DELIVERED CRUDE

** Market participants will be keeping a lookout for the outcome of Taiwan's CPC tender seeking sweet crude for July arrival. While WTI Midland is a favorite for the refinery, some expect it may partially switch procurement to alternative grades amid a wide Brent/Dubai EFS that makes Brent-linked grades less economical for buyers.

** Buying interests from China for Brazil's Tupi crude appear to be reviving amid depleting inventory levels that are gradually bringing back Chinese spot demand, and market participants will keep an eye out for fresh Tupi trades into China in the coming week.

CRUDE FUTURES

** Crude oil futures enter the week amid evolving pandemic situation in Asia, particularly in India and Japan, the third and fourth largest importers of crude oil, respectively, both of which have intensified localized lockdowns recently.

** Nevertheless, market analysts remain bullish on the outlook for oil demand, as they noted that India is yet to impose demand-sapping lockdown measures nationwide, and that Europe and the US seem to be on the verge of an economic rebound.

** Analysts expect that the upcoming OPEC+ meeting, scheduled April 28, is unlikely to see any changes to the earlier decision of raising production from May onward, but have cautioned that it could draw attention to the impending increase in supply, putting pressure on oil prices.

** Oil could also be pressured by the possibility of increased exports from Iran, made more likely after signs emerged from both the US and Iran indicating that the nuclear deal negotiations were progressing well.

** In the week ended April 23, the June contract for Brent had dipped 0.84% to $66.11/b, while the June contract for NYMEX light sweet crude slid 1.66% to $62.14/b.