Asia crude - Key market indicators this week

Singapore — The crude oil market in Asia started the Aug. 11 trading week higher as sentiment was lifted by better-than-anticipated global economic recovery indicators and continued compliance with the OPEC+ production cut deal.

September ICE Brent crude futures were pegged at $45.13/b at 0200 GMT Aug. 11, up 38 cents/b from the Asian close Aug. 7.

MIDDLE EAST CRUDE

** Middle East allocations are expected to kick off this week following the release of September official selling prices by Saudi Aramco and Abu Dhabi National Oil Company in recent days.

** Despite the OSPs being lower than the month before, some market participants were expecting spot market differentials to trade in a steeper discount owing to bearish market conditions.

** Asian crude refiners will be running fresh linear programming models before spot trading for October loading cargoes ramps up.

** The Dubai cash/futures (M1/M3) spread recovered slightly following the drop in OSPs, but remains in discounted territory. The spread stood at a discount of 30 cents/b at the Asia close Aug. 7, S&P Global Platts data showed.

** September Dubai futures were pegged at $44.55/b at 0200 GMT Aug. 11, up 35 cents/b from the Asian close on Aug. 7.

** Intermonth spreads were rangebound in mid-morning trade Aug. 11 from late last week. On the Intercontinental Exchange, the September/October spread was pegged at minus 32 cents/b at 0200 GMT Aug. 11, steady from the Asian close Aug. 7. The October/November was pegged at minus 27 cents/b, slightly lower than minus 24 cents/b at the Asian close Aug. 7.

** The October Brent/Dubai Exchange of Futures for Swaps was pegged at 58 cents/b at 0200 GMT Aug. 11, rangebound compared with plus 55 cents/b at the Asian close Aug. 7.

ASIA-PACIFIC CRUDE

** In the condensate market, Qatar Petroleum is expected to offer October loading deodorized field condensate and low sulfur condensate via tender in the week beginning Aug. 10. In July, QPSPP offered only LSC via tender, which traded at Dubai plus around 25 cents/b.

** The result of Indonesian Pertamina's tender seeking condensate for Oct. 25-27 delivery is expected this week. Pertamina earlier bought 300,000 barrels of Sharjah condensate for H1 October delivery at unspecified discounts to Platts Dated Brent, CFR basis.

** In the light crudes market, loading programs for October-loading Papua New Guinea's Kurubu crude cargoes are expected this week. September loading Kutubu last traded at a premium of around 50 cent/b to Platts Dated Brent, FOB basis.

** In the Far East Russian market, traders are looking out for the results of ONGC's tender for Sokol cargo loading over Oct. 27-Nov. 2. ONGC last week sold 700,000 barrels of Sokol crude for loading over Oct. 10-16 at a premium of around 70-80 cents/b to Platts Dubai, CFR basis.

** Tender results for Vietnamese crudes including October loading Chim Sao and Te Giac Trang are expected this week, while more October-loading Vietnamese crudes could be offered via tender.

** In the Malaysian crude market, traders are watching out for any tenders offering October-loading Kimani or Labuan this week. Expectations for price differentials for the October loading cycle are bearish amid low demand and thin margins. September loading cargoes of Kimanis and Labuan traded at premiums of around $3.7/b to Platts Dated Brent, FOB basis.

** In the heavy sweet crude market, tender results for September-loading Nile and Dar Blend cargoes from Sudan are expected this week. August loading cargoes for the grades traded at unspecified premiums to Platts Dated Brent, FOB basis, traders said.

DELIVERED ASIA CRUDE

** In the delivered crude market, spot trade activity for November delivery cargoes of US WTI Midland and Brazil's Lula crude is anticipated. Activity has been tepid in recent weeks due to a lack of buying interest from China's independent refiners.

** November delivery cargoes of Brazilian Lula crude were last heard offered below $1/b to January ICE Brent Futures, DES Qingdao basis.

** Valuations for November delivery US WTI Midland crude was heard around the mid- to high $1s/b to Platts Dated Brent DES basis, traders said.

CRUDE FUTURES

** Crude futures are drawing strong support from better-than-expected economic data, a sharp drawdown in US commercial crude inventories and a weaker US dollar, pushing the Brent marker above the $45/b resistance level for two consecutive days in the week ending Aug. 7, the highest since early March.

** However, demand remains the biggest uncertainty as global COVID-19 cases exceed 20 million worldwide, according to latest data from John Hopkins University. Analysts believe that oil prices are likely to stay rangebound within the recent trading range until there is a strong and sustained improvement in the global demand outlook.

** The prompt intermonth timespread for Brent swaps has narrowed for the first time in seven weeks, even as it remained firmly in contango, averaging minus 37 cents/b in the week ending Aug. 7, down from minus 41 cents/b the week before.

** The highlight of the week is the US-China trade talks scheduled for Aug. 15, where senior officials from the two countries will discuss Phase 1 of their trade deal. Investors are likely to remain cautious ahead of the meeting against a backdrop of rising geopolitical tensions between the two countries.