Asia Crude Oil: Key Market Indicators for Nov 1-5

Crude oil markets started the Nov. 1-5 trading week on a softer note, with the market keeping an eye on OPEC+’s Nov. 4 meeting for fresh cues on supply, shows Platts data.

ICE January Brent crude futures stood at $83.40/b at 0300 GMT Nov. 1, down 32 cents/b (0.38%) from the Oct. 29 settlement.

Middle East crude

• Activity in the week ahead will focus on the outcome of the OPEC meeting scheduled for Nov. 4 which could shape supply fundamentals in the Middle East crude market. Eyes will also be on the issuance of official selling prices for December by the regions’ various producers.
• Saudi Aramco is expected to issue prices with a hike of 50 cents/b-$1/b across all its Asia-bound crude grades. In October, the Dubai cash/futures spread — a measure of the market structure — widened in backwardation to average $2.29/b, up from $1.42/b in September.
• Asian demand cues remain stable with eyes on China, Japan and India. Cold weather in parts of Asia along with high coal and gas prices could continue to support demand for crude this month.
• Dubai cash/futures (M1/M3) averaged $2.57/b in the week ended Oct. 29, against $2.25/b in the week ended Oct. 22.
• Intermonth spreads were higher during mid-morning trade Nov. 1 with January/February pegged at 93 cents/b, up 7 cents/b from the Asia close Oct. 29.
• January Brent/Dubai Exchange of Futures for Swaps was pegged at $5.17/b at mid-morning Nov. 1, up from $4.90/b from the Asia close Oct. 29.

Asia Pacific crude

• Trading activity in the Asia Pacific sweet crude market is expected to remain thin into the last week of the December trading cycle, with most end-users having already fulfilled their procurement requirements.
• Fresh trading cycle for Far East Russian grades has commenced, with market participants awaiting for tenders for January-loading barrels of Sokol crude.
• In Southeast Asia, traders will be looking out for any fresh tenders from Vietnam’s PV Oil, as well as the results of spot tender for Thang Long and term tender for Te Giac Trang crudes. Spot deals for Malaysia’s Miri and Kikeh crudes are also anticipated.
• Market participants will also be closely watching trade activities for Australian heavy sweet crudes such as Vincent and Van Gogh, for which sentiment has slightly strengthened since the start of the month amid stronger LSFO cracks.
• On OSPs, traders await Malaysia’s October MCO prices, and may seek clarity on Indonesia’s October ICP and Brunei’s September OSP this week.

Delivered crude

• Arbitrage flow of US’ WTI Midland crude into Asia is expected to remain thin amid a narrowing WTI/Brent spread and a steep backwardation market structure.
• Buying interest from Chinese independent refineries for Brazil’s Tupi is likely to remain tepid despite steep offer levels.

Crude futures

• Crude oil futures started the week lower in mid-morning trade Asia Nov. 1 following weak economic data out of China and Beijing’s announcement that it would release state oil product reserves to the domestic market.
• China’s National Food and Strategic Reserves Administration said Oct. 31. that it will release state oil product reserves to the domestic market to offset a supply shortage and stabilize prices in certain regions. It did not announce the volume to be released or targeted regions.
• OANDA’s senior market analyst Jeffrey Halley said oil prices will struggle to trade higher this week amid a slew of key dates and economic releases, including an OPEC+ meeting on Nov. 4 and a meeting of the US Federal Reserve’s Open Market Committee on Nov. 3.
• In the week ended Oct. 29, the international crude oil benchmarks were lower on the week. The January contract for ICE Brent futures fell 1.09% on the week to settle at $85.72/b, while the December contract for NYMEX light sweet crude was down 0.23% at $83.57/b.