Asia’s crude oil market remained resolute at the start of the week beginning March 15 amid bullish sentiment fueled by improved second-half 2021 outlooks, including OPEC’s revised forecast for H2 2021 oil demand, reports Platts.
Middle East Crude
- Trade activity in the week ahead will focus on buy and sell tenders by Asian refiners and Middle East producers, following the issuance of official selling prices last week.
- Qatar Petroleum issued its Al-Shaheen sell tender, which closes March 15 with validity until March 16, while the outcome of Bahrain’s Bapco tender for the sale of a 500,000-barrel cargo of Banoco Arab Medium crude for May loading is awaited. The tender closed March 11, with validity until March 12.
- Focus remains on Chinese and Indian spot demand in the month ahead. China’s Rongsheng issued a buy tender that closed March 12, and was heard to have purchased 2 million barrels each of Oman and Murban crude along with 1 million barrels of Upper Zakum crude.
- Indian crude purchases will be closely watched as the country continues to seek arbitrage barrels from the West. Indian Oil Corp. issued a tender in the week ended March 12 seeking sweet crude from West Africa and other regions, and the outcome of the tender is awaited.
- Dubai cash-futures, or M1-M3, averaged $1.38/b in the week ended March 12, against $1.13/b in the week ended March 5.
- Intermonth spreads narrowed during morning trade March 15, with May/June pegged at 76 cents/b, down 3 cents/b from the March 12 Asian close.
- May Brent-Dubai Exchange of Futures for Swaps was pegged at $2.93/b early March 15 in Asia, down 23 cents/b from March 12.
Asia Pacific Crude
- Asia Pacific sweet crude market participants will be expecting the outcome of several tenders from Vietnam’s PV Oil, including for Chim Sao and Dai Hung crude, for fresh pricing cues on May-loading regional crude grades. Traders generally expect the Vietnamese crudes to be supported by healthy fuel oil cracks, but a longer program from PV Oil compared to the previous month may keep a lid on premiums.
- Results for Indian OVL’s Far East Russian Sokol tender, which closes on March 17, for May 27-June 2 loading are expected to emerge. Strong premium levels of around $2.80/b to Platts front month Dubai assessments, CFR Yeosu, witnessed in the previous May-loading tender are expected to be sustained as a wide Brent-Dubai spread supports the Dubai-linked grade.
- Market participants are also looking forward to results of QPSPP’s tender for May-loading Low Sulfur Condensate, which closes March 15 with same-day validity. Sentiment for condensate markets has weakened amid tepid demand and soft naphtha cracks, but the Dubai-linked grade may also witness some support.
- In procurement tenders, eyes will also be on Taiwan’s CPC tender seeking sweet crude grades for June delivery.
Delivered Crude
- In the Asia delivered crude market, traders are keeping a lookout for fresh trades of Brazil’s Tupi crude for June delivery. Ample supply and sluggish demand from Chinese teapot refineries is placing pressure on market sentiment, so premiums are expected to trend lower.
- Arbitrage for US WTI Midland crude remains closed into Asia amid a wide Brent-Dubai spread, so the market is expected to remain illiquid for the time being.
Crude Futures
- This week, in the absence of other notable developments, we may see oil prices tick higher, as analysts have noted that fundamentals in the oil markets are favorable. OPEC+ supply remains tight following the coalition’s decision to roll over its March quotas into April, and demand is expected to increase as global economic activity picks up.
- The demand outlook for oil received another boost March 10, as a $1.9 trillion dollar stimulus package was approved by US Congress. The stimulus package is expected to increase oil and energy demand by expediting global economic recovery.
- The Brent and NYMEX light sweet crude markers had edged 0.20% and 0.73% lower during the week ended March 12 to settle at $69.22/b and $65.61/b, respectively, on March 12. Both markers had shot up on March 8 following an attempted March 7 drone attack on a petroleum storage tank at the Ras Tanura port, but fell back to the ground after reports emerged that oil supply had not been disrupted.
- OPEC, in its Monthly Oil Market Report released March 11, revised its oil demand forecast for Q1 and Q2 lower by 180,000 b/d and 310,000 b/d, respectively, putting further pressure on the market in the week ended March 12. In the medium term, OPEC remained optimistic, raising its estimates for Q3 and Q4 demand by 400,000 b/d and 970,000 b/d, respectively.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Platts
