Asia crude - Key market indicators this week

Singapore — The crude oil market started the week of Oct. 26 lower as COVID-19 cases continued trending up in Europe and the US, while concerns of rising Libya output also capped sentiment recovery.

At 0200 GMT, December ICE Brent crude futures were pegged at $41.10/b, down $1.33/b from the previous Asia close on Oct. 23, S&P Global Platts data showed.

MIDDLE EAST CRUDE

**Asian refiners have mostly purchased their requirements for December-loading sour crude barrels over the last two weeks.

**Sentiment has improved amid a sudden uptick in buying interest from Chinese refiner Rongsheng Petrochemical, as well as other independent Chinese refiners in view of new import quotas for 2021.

**The Dubai cash-futures (M1-M3) spread recovered to a discount of 39 cents/b in the week ended Oct. 23, compared with a discount of 60 cents/b in the week ended Oct. 16, S&P Global Platts data showed.

**Prompt intermonth spreads were rangebound during mid-morning trade Oct. 26 from late last week. At 0200 GMT, the November-December timespread was pegged at minus 16 cents/b, stable from the Asia close Oct. 23.

**The December Brent-Dubai EFS was pegged at 25 cents/b at 0200 GMT Oct. 26, narrowing 13 cents/b over the same period.

ASIA PACIFIC CRUDE

**In the condensate market, some December loading cargoes of Ichthys and Wheatstone condensates are expected to trade in the week beginning Oct. 26, traders said. December loading condensate cargoes overall performed better month on month supported by higher product margins, traders added.

**January arrival cargoes of Far East Russian Sakhalin Blend crude is expected to trade in the week beginning Oct. 26, with expectations of spot price differentials higher, supported by higher naphtha margins and improved sentiment overall for condensates and light crudes in October, traders said.

**Most December loading Malaysian and Vietnamese crudes have also already traded in the spot market, with some spot cargoes of Kimanis expected to be offered in the spot market in the week beginning Oct. 26, traders said.

**Spot traders for December loading Australian heavy crudes such as Vincent as well as low sulfur fuel oil friendly grades such as November loading Sudanese grades like Nile and Dar Blend are expected to trade in the spot market in the week beginning Oct. 26, traders said.

DELIVERED CRUDE

**In the delivered crude market, more spot trade activity is expected to pick up as Chinese independent refiners start buying crude cargoes for H2 January delivery.

**Trade levels for Brazilian Lula , or Tupi, crude for H2 January delivery were around 80 cents/b to March ICE Brent Futures on a DES Qingdao basis, with some traders expecting the levels to increase if fresh batch of crude import quotas are released in the week beginning Oct. 26.

**For US WTI Midland crude, traders in the week beginning Oct. 26, would be looking for buy tender for late January or February delivery crudes from CPC Taiwan.

CRUDE FUTURES

**Sentiment in crude oil markets is likely to remain bearish during the week, as a second wave of the coronavirus pandemic has forced much of Europe back into lockdown, and as the stalemate over the US stimulus package continues to raise questions over US economic recovery.

**The December contract for Brent and WTI had fallen 2.70% and 3.09%, respectively, in the week ended Oct. 23 to settle at $41.77/b and $39.85/b, respectively, on Oct. 23, after Libyan oil production picked up speed and data from the Energy Information Administration indicated that fundamentals in downstream oil markets had deteriorated.

**According to EIA data, gasoline inventories had risen 1.9 million barrels to 227.02 million barrels in the week ended Oct. 16 , and total refined product supplied, EIA's proxy for demand, had dropped 1.36 million b/d to 18.11 million b/d in the same week.

**Output from Libya also ramped up to over 500,000 b/d in the week ended Oct. 23, as output at the Sharara oil field, the country's largest, climbed to 160,000 b/d, and as production at the 70,000 b/d Abu Attifel field resumed.

**After the Libyan National Army and the Government of National Accord signed a permanent ceasefire in the country on Oct. 23 and the country lifted the force majeure on exports from Es Sider and Ras Lanuf ports, Libyan output may to accelerate to 1 million b/d by within a month, complicating the OPEC+ alliance's efforts to balance supply in markets plagued by weak demand fundamentals.