Asia crude - Key market indicators this week

Singapore — The crude oil market in Asia started the week of Oct. 19 little changed from the week before as OPEC+ efforts to tighten supply continued to be countered by a resurgence in COVID-19 cases in Europe and the US prompting the spectre of further economic restrictions.

December ICE Brent crude futures were pegged up 3 cents/b from previous Asian close at $42.88/b at 0200 GMT Oct. 19.

MIDDLE EAST CRUDE

** More trades and tenders for sour crude are expected to kick off in the week starting Oct. 19 following the conclusion of Qatar's Al-Shaheen crude tender last week.

** Sentiment is expected to dip slightly following Chinese refiner Rongsheng's crude purchasing spree, as demand uncertainty continues to limit market recovery.

** The Dubai cash-futures spread, or M1-M3, ended the week of Oct. 16 at a discount of 60 cents/b, up slightly from a discount of 79 cents/b on Oct. 12, Platts data showed.

** Intermonth spreads were rangebound in mid-morning trade Oct. 19 from late last week, with the November-December timespread pegged at 20 cents/b at 0200 GMT, narrowing 3 cents/b from the previous Asian close.

**The December Brent-Dubai EFS was pegged at 38 cents/b at 0200 GMT Oct. 19, widening 2 cents/b from the Asian close on Oct. 16.

ASIA-PACIFIC CRUDE

** Participants in the condensate market were awaiting the result of Indonesia's tender seeking December-delivery condensates and Qatar Petroleum's tender offering December-loading condensates Oct. 19, with expectations bullish amid higher product margins, traders said.

** Participants in the Far East Russian market will be closely watching the result of Indian ONGC's tender offering its second cargo of Russian Sokol crude in the week beginning Oct. 19 after it sold its first cargo at a discount of around 45 cents/b, traders said.

** More spot trade results of Malaysian and Vietnamese December loading crudes are expected in the week beginning Oct. 19, after a couple of cargoes traded at premiums the week before, traders said.

** Market participants will also be watching for spot offers for December loading Australian Heavy sweet crudes, including Pyrenees and Vincent, in the week beginning Oct. 19, traders said.

DELIVERED CRUDE

** Traders are expecting spot trade activity in the Asian delivered crude market to resume in the week beginning Oct.19 after being muted last week.

** Valuations for January delivered US WTI Midland crude were last heard at premiums in the high $1s/b to Platts Dubai, and for January delivered Brazilian Lula crude heard around 70 cents/b to March ICE Brent Futures on a DES basis, traders said.

CRUDE FUTURES

** Fundamentals in the crude oil market are unlikely to improve this week as demand is expected to remain subdued amid tightened coronavirus restrictions in Europe and a stagnating US economic recovery.

** Market hopes that the OPEC+ alliance will decide against easing its production cuts as scheduled from 2021 were reignited when OPEC Secretary General Mohammed Barkindo acknowledged Oct. 15 that demand for oil is unlikely to rebound quickly. As such, the market will be closely following any news from OPEC's Joint Ministerial Monitoring Committee meeting on Oct. 19.

** The December contract for Brent and the November contract for WTI ticked up 0.19% and 0.69% respectively in the week ended Oct. 16 to settle at $42.93/b and $40.88/b as improved demand from China and India provided some relief to oil markets.

** China's crude oil imports rose 2.11% month on month and jumped 17.6% year on year to average 11.8 million b/d in September, customs data showed, with seasonal demand from Indian refiners kicking in ahead of the Navratri and Diwali festivals.

** However, bullish developments in India and China failed to galvanize the market after US Energy Information Association data released Oct. 15 showed that US crude exports fell to a 14-month low of 2.135 million b/d in the week ended Oct. 9, with both market analysts and traders not expecting a recovery in export demand in the near term.

** New lockdown restrictions in Europe, including in France and the UK, signaled further economic pain, capping potential upside for oil prices.