Asia crude - Key market indicators this week

Singapore — The crude oil market in Asia started the week of Nov. 16 slightly higher, amid continued optimism from the COVID-19 vaccine news and possible extension of OPEC+ output cuts into 2021, although rising coronavirus cases in Europe and the US could weigh on sentiment.

January ICE Brent crude futures was pegged at $43.19/b at 0300 GMT Nov. 16, up 5 cents/b from the Asian close Nov. 13.

Middle East crude

** Trade activity for January-loading barrels is expected to ramp up this week with the conclusion of Qatar's key Al-Shaheen crude tender expected at the beginning of the week of Nov. 16.

** Qatar Petroleum is offering two cargoes of 500,000 barrels of Al-Shaheen crude, along with one 500,000-barrel cargo of Qatar Marine in a tender that closes Nov. 16 with next-day validity.

** Cash premiums could strengthened this month amid expectation of strong demand, as witnessed by trades heard for Iraqi crude last week.

** The Dubai cash/futures (M1/M3) spread rose to a premium of 16 cents/b in the week ending Nov. 13, from minus 16 cents/b the previous week, bringing the average in November so far to parity, much higher than the minus 67 cents/b average in October.

** Inter-month spreads were higher in mid-morning trade Nov. 16 with December/January pegged at 6 cents/b at 11 am Singapore time (0300 GMT), compared with 1 cent/b at the Asia close on Nov. 13.

** January Brent/Dubai Exchange of Futures for Swaps was pegged at 45 cents/b mid-morning, widening from 38 cents/b at the Asia close on Nov. 13.

Asia-Pacific crude

** Sentiment took a slightly more bullish turn recently, sources said, following a stronger Middle Eastern crude complex over the last few days.

** The market is waiting for the outcome of Qatar Petroleum's offer tender for January-loading DFC/LSC condensates, closing Nov. 16 with next-day validity.

** More spot trade results of January-loading Malaysian and Vietnamese crudes are also expected in the week beginning Nov. 16.

**Low sulfur fuel oil-friendly crudes like Vincent and Dar Blend are expected to see supportive differentials amid stronger LSFO cracks in recent weeks.

**More cues are set to emerge in the Far East Russian crude market amid the result of India OVL's second Sokol offer tender.

Delivered crude

** Latest H2 February-delivered Lula (Tupi) cargoes were heard offered at around April ICE Brent futures plus $2.50/b, DES Qingdao basis.

** February-delivered Lula had last traded between April ICE Brent futures plus $1.30-$1.40/b, DES Qingdao. Buy-sell indications have risen in recent days.

Crude futures

** After posting an impressive rally in the week ended Nov. 13, crude oil prices this week will be tethered to news flow on the progression of the coronavirus pandemic. Discussions over the status of OPEC+ production cuts may also affect market sentiment this week, especially with the monthly meeting of the Joint Ministerial Monitoring Committee (JMMC) scheduled for Nov. 17.

** The January contract for Brent and the December contract for WTI settled 8.44% and 8.05% higher on the week, respectively, last week, with the rally fueled by reports that a Pfizer and BioNTech COVID-19 vaccine was found to be more than 90% effective in a phase 3 trial.

** However, with market analysts stressing that any vaccine may not be available at a large-scale till the second half of 2021, the rally in oil prices fizzled out toward the end of last week. Bearish US Energy Information Administration data also capped the price gains, after it showed an unexpected 4.28 million-barrel build in crude inventories in the week ended Nov. 6.

** In the near term, the market remains concerned about the progression of the coronavirus pandemic, with Japan reporting record high daily infections over the weekend, and US states following the path taken by Europe in tightening restrictions.

** Amid the backdrop of the pandemic, the International Energy Agency and OPEC revised their forecast for 2020 oil demand downward by 400,000 b/d and 280,000 b/d, respectively.