Asia Crude Oil: Key Market Indicators for Oct 11-15

Crude oil markets started the week of Oct. 11-15 on higher ground given a tightening supply outlook as market participants expect sentiment to remain supported on the back of high LNG and coal prices, which continue to prompt energy suppliers to switch to oil where possible, reports Platts.

ICE December Brent crude futures stood at $83.49/b as of 0300 GMT Oct. 11, up $1.10/b (1.34%) from its Oct. 8 settlement price.

Middle East crude

• Activity in the week ahead will focus on issuance of spot tenders for December-loading crude, especially Qatar Petroleum’s tender offering Al-Shaheen and other crude grades.
• Eyes will be also be on Saudi Aramco’s term allocations for November. After a cut in official selling prices, Asian refiners are expected to seek full term supplies amid rising crude prices, while some buyers could also request incremental volumes on the back of rising crude prices.
• Spot differentials for Russia’s ESPO Blend crude will also be keenly watched. Backed by expectations of increased buying interest from Chinese independent refineries as well as strong winter demand, spot premiums could be as high as $4-$4.50/b to Platts Dubai for December-loading cargoes.
• Dubai cash-futures (M1-M3) averaged $2.14/b in the week ended Oct. 8, against $1.31/b in the week ended Oct. 1.
• Intermonth spreads were steady during mid-morning trade Oct. 11 with December-January pegged at 76 cents/b, unchanged from the Asia close Oct. 8.
• December Brent-Dubai Exchange of Futures for Swaps was pegged at $4.15/b mid-morning Oct. 11, down 6 cents/b from the Asia close Oct. 8.

Asia-Pacific crude

• Participants in the condensates market will keep a lookout for the outcome of QPSPP’s monthly sour condensate tender, as well as any fresh trades for December-loading Australian condensates. The outcome of Pertamina’s procurement tender seeking crude over December-January will also be in focus.
• Traders will be seeking clarity on the outcome of OVL’s first tender offering December-loading Sokol crude for fresh pricing cues. Sentiment for the grade remains supported amid a wide Brent-Dubai spread and strengthening middle-distillate cracks.
• For regional grades, traders will be looking out for the loading program for Malaysian crudes, as well as fresh spot and term tenders by Vietnam’s PV Oil.
• Traders will monitor the outcome of Petronas’ tender offering late November-loading Dar blend crude, as well as spot trading activity for November-loading barrels of Australia’s Van Gogh and Vincent crudes.

Delivered crude

Traders are looking for clarity on the outcome of CPC Taiwan’s term tender seeking monthly cargoes of US’ WTI Midland crude.

Market participants will also be gauging the attractiveness of arbitrage crude grades against regional crudes amid a strongly backwardated market structure.

Crude futures

• Crude oil prices were higher as OPEC+ resisted calls to raise November output beyond the planned 400,000 b/d amid rising demand. OPEC+ will next meet on Nov. 4 to review production plans for December.
• Sentiment was supported after the US Department of Energy noted that the country has no current plans to tap into the country’s oil reserves or reimpose crude export restrictions to help quell rising gasoline prices.
• US commercial crude stocks rose 2.35 million barrels to 420.89 million barrels in the week ended Oct. 1, putting inventories at a four-week high, but still around 7% behind the five-year average. The build came in above market expectations as the American Petroleum Institute’s latest data showed stockpiles were up 951,000 barrels on the week.
• NYMEX WTI topped the $80/b threshold late Oct. 8, the front month contract reaching up to fresh multi-year highs since Nov 1, 2014. The front month NYMEX WTI last settled above $80/b on Oct. 31, 2014.
• In the week ended Oct 8, the international crude oil benchmark were higher on the week. The December contract for ICE Brent crude futures rose 3.92% on the week to settle at $82.39/b, while the November contract for NYMEX light sweet crude was up 4.57% at $79.35/b.