Asia crude - Key market indicators this week

Singapore — Crude market sentiment in Asia started the week on a stronger note Monday as participants digested the release of key Middle East official selling prices in recent days.

July ICE Brent crude futures stood at $30.42/b at 0145 GMT Monday, up 51 cents/b from the 0830 GMT close in Asia Friday.

MIDDLE EAST CRUDE

** July Dubai derivative was pegged at $32.06/b in mid-morning trade in Asia Monday, up 72 cents/b from Friday's Asian close.

** Intermonth spreads were mixed, with the June-July spread pegged at minus 65 cents/b and the July-August at minus 63 cents/b at 0145 GMT, compared with minus 58 cents/b and minus 63 cents/b, respectively, at the 0830 GMT Asian close Friday. The Brent/Dubai Exchange of Futures for Swaps was pegged at minus $1.64/b Monday morning, compared with minus $1.43/b at the Asian close Friday.

** Middle East crude traders in Asia were digesting the official selling prices for June cargoes issued by Saudi Aramco and ADNOC in recent days while awaiting the remaining Middle East OSPs.

** Aramco unexpectedly raised nearly all of its crude OSPs, in a reversal of its market strategy of the last few months, and a move similarly made by ADNOC on Sunday.

** Traders expect other producers to keep in step as raising prices shore up fast-eroding oil revenues from weak underlying global benchmark prices.

** Spreads for Dubai futures have firmed in recent days, although they remain in contango.

ASIA-PACIFIC CRUDE

** Condensate traders are awaiting the result of Qatar Petroleum's DFC/LSC tender result for July loading cargoes to see if key buyers in South Korea participate after their absence last month.

** Spot trade activity in Australia's' North West Shelf condensate will also be closely followed after the release last week of the July-loading schedule, with some June-loading spot barrels still unsold.

** Participants in the Far East Russian market are awaiting the result of India's ONGC tender for Sokol crude for July loading, expecting prices to be higher than for June loading cargoes.

** Traders will also be watching out for any early spot bids/offers for Malaysian crude grades this week, with some traders expecting discounts for these grades to be higher this month, although they remain cautious amid the lack of any trade to date.

DELIVERED CRUDE MARKET

** Participants expect to see Brazilian Lula crude cargoes changing hands this week amid an expected increase in demand from China's independent refiners.

** Offers for Lula crude have risen to flat for August delivered cargoes against October ICE Brent Futures in recent days, although deals have yet to emerge.

** The US's WTI Midland crude grade offers into Asia have also been increasing in recent days as an uptick in demand from Europe supports offer levels to Asia.

** Offers for WTI Midland delivered to Asia were last heard at small discounts to October ICE Brent Futures for August delivered cargoes.

CRUDE FUTURES

** Market expected to remain volatile this week as investors grapple with the uncertain supply-demand outlook.

** Demand shows signs of a slow rebound as more countries ease lockdowns and reopen businesses, but overflowing supply and storage constraints remain.

** Investors are also closely monitoring further developments in resurfaced tensions between the US and China.

** The contango for the Brent swaps forward curve has narrowed in recent days. The June/July timespread stood at minus 89 cents/b at Friday's Asian close, compared with minus $1.31/b May 1.