Asia Crude Oil: Key Market Indicators For Nov 8-12

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Crude oil markets started the Nov. 8-12 trading week stronger after the OPEC+ alliance resisted calls for greater increases in production for December during their Nov. 4 meeting, raising expectations of supply tightness.

ICE January Brent crude futures stood at $83.76/b at 0300 GMT Nov. 8, up $1.02/b (1.23%) from the Nov. 5 settlement, says an article published in Platts.

Middle East crude

Market participants will be looking out for official selling prices from other Middle East producers such as QatarEnergy and Iraq’s SOMO; after which spot activity for January-loading crude kicks off.

Last week, key Middle East producers Saudi Aramco and Abu Dhabi’s National Oil Company issued OSPs for December. Saudi Aramco hiked OSPs by $1.10/b-$2.80/b across its Asia-bound crude grades loading in December.

Spot buying for January-loading crude is expected to be strong amid an ongoing seasonal uptick in winter demand, higher OSPs, tighter supply from OPEC+ producers and a wide Brent-Dubai EFS stemming the flow of arbitrage barrels from the West.

Dubai cash-futures (M1-M3) averaged $3.36/b in the week ended Nov. 5, against $2.57/b in the week ended Oct. 29

Intermonth spreads were wider during mid-morning trade Nov. 8 with January-February pegged at 86 cents/b, up 6 cents/b from the Asia close Nov. 5.

January Brent-Dubai Exchange of Futures for Swaps spread was pegged at $4.97/b mid-morning Nov. 8, down from $5.04/b at the Nov. 5 Asian close.

Asia Pacific crude

Market participants await Australian North West Shelf condensate January loading program and potential demand from Indonesia’s Pertamina, while closely monitoring any overhang in December-loading barrels.

On Qatari condensates, tenders for January loading DFC and LSC will be in focus as naphtha crack spreads kicked the month off on a strong note.

Indian OVL’s Far East Russian Sokol crude tender is expected to be issued this week, with cash premiums likely to remain resilient amid a wide Brent-Dubai EFS.

The January-loading program for Australia’s Ichthys Field Condensate, Cossack and Papua New Guinea’s Kutubu Blend are expected to be released later this week.

Southeast Asia-based traders will be looking out for fresh tender activity from Vietnam’s PV Oil and the January-loading program for Malaysia’s Kimanis crude.

Market participants will also be watching out for trade activity in medium heavy and heavy sweets, including December loading barrels of Sudan/South Sudan’s Dar Blend and Australia’s Vincent crudes, as sentiment has improved amid stronger LSFO cracks.

Traders await clarity on Indonesia’s October ICP and Brunei’s September OSP this week.

Delivered Crude

Market participants keep a lookout for fresh trades of Brazil’s February-arrival Tupi crude, as run rates from Chinese state-owned enterprises remain upbeat.

Arbitrage flow of US’ WTI Midland crude into Asia is expected to remain thin amid a narrower M2 Brent-WTI spread.

Crude futures

Crude oil futures started the week on a bullish note mid-morning Nov. 8 amid a broad risk-on sentiment in financial markets following a strong US jobs report and news of Pfizer’s antiviral drug.

Outlook for jet fuel demand to get a boost as the US reopens its borders to vaccinated travelers across the world Nov. 8.

Vitol’s Asia head Mike Muller said Nov. 7 global oil inventories have fallen to pre-pandemic levels and may face further tightness as OPEC+ spare capacity nears a critical level by the middle of next year.

In the week ended Nov. 5, the international crude oil benchmarks were lower on the week. The January contract for ICE Brent futures fell 1.17% on the week to settle at $82.74/b, while the December contract for NYMEX light sweet crude was down 2.75% at $81.27/b.

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Source: Platts

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