Asia crude - Key market indicators this week

New York — The crude market in Asia started the week June 8 -12 higher mid-morning on June 8 after Saudi Aramco raised key Middle East official selling prices for all of its crude for all regions following an OPEC+ agreement to extent deep cuts for July.

August ICE Brent crude futures stood at $42.85/b at 0300 GMT June 8, up $2.22/b from $40.63/b the 0830 GMT close in Asia on June 5.

MIDDLE EAST CRUDE

**August Dubai derivative rose $2.24/b from June 5 Asian close to around $42.30/b June 8 morning, tracking the uptrend in the futures market.

**Inter-month spreads were higher on June 8 mid-morning with the July/August spread pegged at 3 cents/b and the August/September spread was pegged at minus 7 cents/b June 8, from minus 14 cents/b and minus 26 cents/b respectively at the Asian close on June 5.

**Brent/Dubai Exchange of Futures for Swaps was pegged at 55 cents/b June 8 morning, compared to 57 cents/b at the Asian close on June 5.

**After reaching yet another tenacious production cut extension agreement on June 6, many OPEC+ members in the Middle East are expected to follow Saudi Aramco's lead in hiking official selling prices of their July set of crude exports week ending June 13.

**Aramco on June 7 hiked its OSPs to Asia by $5.60-$7.30/b, far above the $2-$5/b increase that traders had expected according to Platts' monthly OSP survey conducted in early-June.

**High prices could suppress buying appetite for Middle East crudes, but demand in Asia could also see support from supply cuts, after OPEC+ agreed to cut production 9.6 million b/d in July, up from an initial agreement figure of 7.7 million b/d

**Key Middle East sour crude market indicator, the Dubai cash/futures spread, clocked in its first full week in backwardation on June 5 after being negative since early-March, amid a turn in market sentiment as OPEC+ is on the brink of extending its 9.7 million b/d supply cuts to July.

**The spread averaged $0.41/b for the week of June 1-5, Platts data showed. The same spread averaged minus $1.23/b for the week of May 22-29.

ASIA-PACIFIC CRUDE

**The outcome of India's ONGC tender result for Sokol crude in the week starting June 8 will be widely anticipated as it is the first tender for August loading cargoes and could set the tone for trading this month.

**Traders expect the prices for August loading regional barrels to remain supported following Saudi Aramco's move to raise their official selling prices although demand concerns remain.

**The condensate and light crude barrels will see the release of August loading program week beginning June 8 with trades expected to emerge from June 10.

DELIVERED CRUDE MARKET

**In the delivered crude market, spot trades for September delivered US WTI Midland crude is expected to emerge week beginning June 8 as market participants remained cautious ahead of the OPEC meet.

**Spot trade levels for September delivered Brazilian Lula crude, which was last heard done at around $3/b premium to November ICE Brent Futures is also expected to strength for the week beginning June 8 amid OPEC cuts and demand for Chinese independent refineries, trade sources said.

CRUDE FUTURES

**Latest OPEC+ meeting on June 6 set a bullish tone for the start of the trading week June 8-12.

**Brent swaps contango structure seen steady to narrower recently as market awaited fresh supply cues from the OPEC+ alliance. The prompt Brent swaps July/August timespread averaged minus 24 cents/b at the Asian close in the week ended June 5, according to Platts data.

**Concerns remain around whether US shale production will increase in response to recovering prices amid the ongoing OPEC+ cuts.

**Higher refined product inventories based on latest available US Energy Information Administration data also posed concerns over demand recovery.