Asia crude - Key market indicators this week

Singapore — Crude oil markets in Asia kicked off the week of Nov. 9 rangebound as sentiment firmed after Joe Biden was declared winner of the US presidential election, as well as higher US job numbers and Chinese export numbers, but the COVID-19 pandemic continued to weigh on recovery.

January ICE Brent crude futures were pegged at $40.43/b at 0200 GMT Nov. 9, down 10 cents/b from the Asia close on Nov. 6, Platts data showed.

WATCH: Market Movers Asia, Nov 9-13: Markets digest US election results, assess potential impact of Biden win on US-Asia trade

MIDDLE EAST CRUDE

** After the release of Saudi Aramco's official selling prices last week that were in line with expectations, focus this week will shift to the release of OSPs by other major producers in the Middle East.

** Dubai cash/futures (M1/M3) rose to a three-month high of a 10 cent/b premium at the 4:30 pm (0830 GMT) Singapore close Nov. 6, taking the month-to-date average to minus 16 cents/b.

** With benchmark cash Dubai futures strengthening late last week, markets will be hopeful Asian demand, especially from India and China, will help to sustain the momentum this week.

** Prompt intermonth spreads were rangebound Nov. 9 from the previous Asian close. The December/January spread was pegged at minus 12 cents/b at 0200 GMT, narrowing 1 cent/b from the Asian close Nov. 6.

** The prompt January Brent/Dubai Exchange of Futures for Swaps was pegged at 8 cent/b at 0200 GMT, widening 1 cent/b over the same period.

** Trade activity was expected to ramp up this week after Asian refiners run their linear programming models following the release of the OSPs.

ASIA-PACIFIC CRUDE

** More activity is also expected in the Asia-Pacific crude market in the week starting Nov. 9, particularly for January-loading Vietnamese and Malaysian crudes.

** However condensate and light crude markets may see downward pressure amid volatile light product margins.

** Sokol crude differentials have risen since the conclusion of India's OVL tender with improved middle distillate margins and easing oversupply.

** Differentials for LSFO-friendly crude grades such as Vincent and Dar Blend are expected to remain supported amid strong LSFO cracks.

DELIVERED CRUDE

** Trading for February-delivered Brazilian Lula (Tupi) crude has commenced at slightly lower than January-delivered levels but likely to remain steady as the month progresses.

** The US WTI Midland market remains quiet amid a lack of fresh trades, with sources expecting slight downward pressure on sentiment.

CRUDE FUTURES

** The trajectory of oil prices this week will depend on the after-effects of the US presidential election, with Donald Trump questioning the legitimacy of result. A Biden presidency amid an increasingly likely split Congress may put some pressure on the oil complex, as there are now concerns of a protracted debate over the US stimulus package, which is seen by markets as crucial to the US' economic health and oil demand recovery.

** Citing the likelihood of a split Congress, analysts downplayed the impact of Joe Biden's green policy drive and his more amenable view of Iran on the oil complex in the near term, but oil prices nevertheless were pressured late last week as the prospect of a Biden win became clearer. It is unclear if this will continue now that Biden has won the election.

** The rising number of coronavirus cases in the US last week and the re-imposition of movement restrictions across Europe, including nationwide lockdowns in England, France and Germany, also dampened sentiment last week.

** However, before the US election dominated headlines, crude prices last week were lifted by Algerian energy minister Abdelmadjid Attar, who holds OPEC's rotating presidency, telling his country's parliament that he was in favor of maintaining current OPEC+ cuts and Russian energy minister Alexander Novak holding talks with domestic producers over the same issue.

** With indications of OPEC+ action on supply, the January contract for Brent and the December contract for WTI settled higher last week, rising 3.98% and 3.77% on the week to $39.45/b and $37.14/b, respectively.