Singapore — The crude oil market in Asia started the Sept. 14 trading week in a tight range following the slide in the previous week ended Sept. 11. Sentiment remains weighed by demand uncertainty amid an increase in coronavirus infections.
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November ICE Brent crude futures were pegged at $39.87/b at 0200 GMT Sept. 14, sliding 12 cents/b compared with $44.25/b at the Asian close on Sept. 11, but gaining 4 cents/b compared with the settlement on Sept. 11.
MIDDLE EAST CRUDE
**Key sour crude tenders are expected to kick off this week, following the release of official selling prices last week.
**Middle Eastern producers have cut their October OSPs further from September against a bearish market backdrop.
**Spot market differentials have the potential to rebound back to small premiums, versus their OSP, but some sources were less optimistic owing to uncertainty in demand recovery.
**November cash Dubai was assessed at a 60.50 cents/b discount to same-month Dubai futures, up 5 cents/b day on day, Platts data showed.
**Intermonth spreads were steady to wider in mid-morning Sept. 14 from late last week. The October-November spread was pegged at minus 38 cents/b at 0200 GMT, widening 2 cents/b from the Asian close Sept. 11.
**The November Brent/Dubai Exchange of Futures for Swaps was pegged at 3 cents/b, narrowing 10 cents/b over the same period.
**Market participants would be looking out for the results of Pertamina's condensate buy tender for Nov.14-17 delivery as well as Qatar Petroleum's sell tender offering November-loading low sulfur condensate in the week beginning Sept.14, traders said.
**Market participants would also be looking out for loading programs of other light crudes including November-loading Cossack and Kutubu Light as well as spot trades for the same in the week of Sept.14, traders said.
**More spot tenders offering November-loading Sokol are expected in the week after ONGC on Sept.10 sold a 700,000-barrel cargo of Sokol crude for loading in November to a trading house at a lower than expected discount of around 80 cents/b to Platts Dubai on a CFR basis, traders said.
**Tenders for various Vietnamese crude grades, including November-loading Ruby, Chim Sao and Su Tu Den, are expected to conclude in the week of Sept.14, traders said. Some of these barrels are expected to be bought by domestic refinery, Binh Son Refining and Petrochemical, which has returned to the spot market after being shut for around two months for maintenance.
**Spot trades as well as tenders offering November loading Malaysian crude grades are expected in the week of Sept.14, with some traders expecting prices to stabilize this month after touching a three-month low in August, while others see prices falling even lower amid weak margins and poor end-user demand.
**In the delivered crude market, Brazilian Lula crude last traded at close to 50 cents/b to February ICE Brent Futures for a December delivery cargo, but this may weaken in the week beginning Sept.14, given the soft demand from Chinese independent refiners, traders said.
**Spot trade activity for December-delivered US WTI Midland crude has been thin and traders would be watching to see if there are any new fixtures for the same.
**Crude futures extended its losses in the week ended Sept. 11 after front-month NYMEX WTI and the global Brent marker recorded another weekly drop of about 6% to settle at $37.33/b and $39.83/b, respectively, on Sept. 11.
**A multitude of negative factors, including the end of the US driving season and the start of the extended maintenance season for US refineries, which will see a tapering of demand for gasoline and crude, as well as slower buying by China in August as its stock approaches maximum storage capacity weighed on sentiments.
**Combined with a stronger dollar and weaker risk sentiment, the prompt intermonth timespread for Brent swaps weakened to a weekly average of minus 51 cents/b for the week ended Sept. 11, wider by 10 cents/b compared with minus 41 cents/b the week before.
**Analysts indicate that the weak spreads and favorable freight rates are pushing trading houses to bid for offshore storage, which could provide a layer of downside support to the global crude complex.
**Market participants will look for fresh cues from OPEC+ and the International Energy Agency's monthly oil market report scheduled for release on Sept. 14 and 15, respectively, before the spotlight turns to the OPEC+ Joint Ministerial Monitoring Committee meeting on Sept. 17.