Asia crude - Key market indicators this week

Singapore — The crude oil market started the week firmer in Asia, with spot trading for June-loading cargoes in the Middle East and Asia Pacific markets expected to wrap up in the coming days.

June ICE Brent crude futures stood at $21.23/b at 0200 GMT Monday, up 33 cents/b from the 0830 GMT close in Asia last Friday.

MIDDLE EAST CRUDE

** June Dubai futures fell 11 cents/b from Friday's Asian close to around $26.18/b in mid-morning trade in Asia Monday, as the Middle East sour crude futures complex eases against the Brent complex.

** Intermonth spreads were stronger Monday, with May/June pegged at minus $2.88/b and June/July at minus $1.27/b at 0200 GMT, compared with $2.96/b and minus $1.38/b, respectively, at the 0830 GMT Asian close Friday.

** The Brent/Dubai Exchange of Futures for Swaps spread was pegged at minus $4.90/b Monday morning, compared with minus $5.34/b at the Asian close Friday.

** The June Dubai cash/futures spread averaged minus $9.34/b for the week of April 20-24, up more than 10% from the minus $10.55/b average the previous week, S&P Global Platts data showed.

** The Middle East sour crude market will seek to wrap up June trading in the final week of the month and await official selling prices from producers for the next cycle. Trades may be delayed, however, as offers moved up last week while buyers canceled several tenders due to higher-than-expected offer prices.

** Availability of Middle East crude grades in the spot market suddenly looked scarce, but this was more likely due to workable storage economics incentivizing sellers to clear excess barrels into tanks rather than show them to buyers, traders said.

** A rare spot trade for Abu Dhabi's Umm Lulu crude in Asia on Friday highlighted the difficulty sellers of Middle East crude are experiencing in finding homes for excess barrels. The cargo, offered in the Asian crude spot market by Spanish oil company Cepsa Friday morning, was purchased by China's Unipec later in the day after Cepsa lowered the offer price from a premium of 10 cents/b to 5 cents/b against the June Umm Lulu OSP.

ASIA PACIFIC CRUDE

** Market participants this week would be looking out for any spot trades of North West Shelf condensate. Four cargoes from the June-loading program and one cargo from the May-loading program are still unsold in the market.

** With Malaysia's Labuan crude trading at record lows of a discount around the mid-$4s/b to Platts Dated Brent on an FOB basis last week, market participants will be on the lookout for subsequent trades for other key Malaysian sweet crude grades such as Kimanis crude.

** Indonesia's Pertamina last week offered a cargo of June-loading Banyu Urip via tender, and it remains to be seen if the tender will eventually be awarded amid generally poor demand in the region.

** Market participants this week would be looking out for the official selling prices of crudes from Malaysia and Brunei.

DELIVERED ASIA CRUDE

** Offers for Brazil's Lula crude have increased from minus $6-$6.5/b to ICE Brent futures to minus $5/b on a DES basis, on account of increasing freight rates. Market participants would be keeping an eye on these offers, especially, China's independent refiners.

** Taiwan's CPC has for the second consecutive month skipped issuing tenders seeking WTI Midland crude amid poor demand and refinery cuts. Market participants would be looking out for where demand could appear for the US crude, with some traders saying that one outlet could be China.

CRUDE FUTURES

** Volatile movement is expected even as crude futures appear to have found a floor currently, after a dramatic week that saw the NYMEX contract slip into negative territory for the first time.

** Storage concerns prevail as market structure for oil futures remain in a deep contango.

** Demand is expected to recover slowly as countries gradually ease lockdowns and reopen businesses.

** Oversupply concerns remain inadequately addressed with production cuts unlikely to balance out the significant decline in Q2 demand.