Asia crude oil: Key market indicators for Dec 27-31

Crude oil futures are set to remain supported during the week of Dec. 27-31 as risk-on sentiment in the broader financial markets remained intact, though COVID-19 cases were still climbing in the West.

ICE February Brent crude futures stood at $78.70/b at 0235 GMT Dec. 28, up $2.56/b, or 3.36%, from the Dec. 24 settlement.

Middle East Crude

** Focus in the Middle East crude market will shift towards the upcoming Jan. 4 OPEC+ meeting, where February production quotas will be decided, and the issuance of official selling prices, or OSPs, for February by Middle East producers.

** The uncertainty associated with globally rising cases of the omicron variant continues to weigh on the demand outlook, and is likely to factor into the OPEC+ quota decision, though demand cues in Asia remain largely resilient.

** Market participants will also be looking out for the issuance of the first batch of 2022 crude import by the Chinese government for the private refining sector.

** Dubai cash-futures, or M1-M3, averaged $1.38/b in the week ended Dec. 24, against $1.57/b in the week ended Dec. 17.

** Intermonth spreads were narrower during mid-morning trade Dec. 28 with February-March pegged at 42 cents/b, down 4 cents/b from the Asia close Dec. 24.

** February Brent-Dubai Exchange of Futures for Swaps was pegged at $3.28/b mid-morning Dec. 28, up from $2.90/b from the Asia close Dec. 24.

Asia Pacific Crude

** Trading activity in the Asia Pacific sweet crude and condensate markets for February loading barrels are expected to wind down as most procurement requirements have been fulfilled

** Market participants will closely track overhang barrels of light sweet condensates into the new trading cycle, as well as monitor the tender results from China's Fuhaichuang for March delivery condensate barrels.

** Across the light sweet crude complex, trading activity for Australia's February loading Cossack are expected.

** For regional crudes, cash premiums for February loading barrels surged following trades concluded for Malaysia's Kimanis and Labuan. Spot deals for Miri and Kikeh crudes are also in focus.

** Trading activity for February loading barrels of Australian heavy sweet crudes such as Vincent and Pyrenees are expected to emerge this week.

Delivered Crude

** Traders await to confirm Taiwan CPC Corporation's monthly sweet crude tender results as a potential pricing indication for delivered WTI Midland crude to Asia.

** Trading activity for March delivery of Brazil's Tupi crude could tick higher amid a flurry of buying activity from Chinese independent refineries.

Crude Futures

**Both front month ICE Brent and NYMEX light sweet crude contracts have climbed by around 10% since falling to 2-week lows on Dec. 20.

** Trade volumes are expected to remain thin for the remainder of the week with most market participants away for the holidays.

** In the week ended Dec. 24, the international crude oil benchmarks were higher on the week. The February contract for ICE Brent futures was up 3.56% on the week to settle at $76.14/b, while the February contract for NYMEX light sweet crude was 4.34% higher at $73.79/b.