Asia crude oil: Key market indicators for April 4-8

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Crude oil prices are expected to be rangebound in the April 4-8 trading week as ongoing supply concerns arising from Russia’s invasion of Ukraine are countered by concerns over the impact on demand of the COVID-19 resurgence in China.

Front-month June ICE Brent crude futures stood at $103.66/b at 0200 GMT April 4, up 2 cents/b from the 0830 GMT Asia close April 1.

Middle East

Market participants are awaiting the release of official selling prices for May loading crude cargoes by Middle Eastern producers in the week before spot trade for the month kicks off.

Saudi Aramco is expected to hike OSPs by around $4-$5/b for all its grades bound for Asia, with other producers expected to announce similar rises.

Demand cues for the week are mixed, especially from China and Japan. While China battles a new COVID-19 surge, Japanese refineries are entering turnaround season.

India remains a key Asian buyer in APril, with the country’s demand for oil and products expected to grow in the weeks ahead.

The Dubai cash/futures (M1/M3) spread averaged $6.70/b in the week to April 1, narrowing from $7.43/b the week before.

Intermonth spreads were wider during mid-morning trade in Asia April 4, with June-July pegged at 95 cents/b, down 21 cents/b at the Asia close April 1.

The June Brent/Dubai Exchange of Futures for Swaps was pegged at $7.05/b mid-morning April 4, down from $8.07/b at the Asia close April 1.

Asia-Pacific

Trading activity in the Asia-Pacific sweet crude market was expected to remain thin into the last week of the May loading cycle, with most end-users having already covered their requirements.

For regional crudes, market participants will look out for spot deals on Malaysia’s Miri and Kimanis grades, with overhang barrels heard in the market.

For heavy sweet crudes, trading activity for Australia’s Van Gogh is expected to emerge this week, while clarity on trade details for May-loading Pyrenees are awaited.

Traders are also awaiting the release of Indonesia’s March ICP and Brunei’s February OSP this week.

Delivered

The arbitrage flow of US’ WTI Midland crude into Asia remains sparse following CPC Taiwan’s buy tender for June delivery barrels amid a narrowing WTI/Brent spread.

Trading activity for June delivery cargoes of Brazil’s Tupi crude is expected to remain muted after earlier deals, and as China’s COVID-19 concerns weigh on demand.

Futures

Crude oil futures are expected to be rangebound this week as the market monitors a two-month truce in Yemen between Houthi rebels and a Saudi-led coalition that started April 2, ongoing concerns over the war in Ukraine, and surging COVID-19 cases in China.

The EU on April 3 called for more sanctions against Russia, with EU ministers discussing ending Russian energy imports, after Ukraine accused Russian forces of war crimes near Kyiv. Any ban on Russian energy imports by Europe will likely throw oil markets into disarray.

The June contract for ICE Brent futures fell 11.1% on the week to settle at $104.39/b April 1, while the May contract for NYMEX light sweet crude fell 12.8% over the same period to $99.27/b.

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Source: Platts

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