Crude oil futures dived during midmorning trade in Asia July 19 on news that the OPEC+ will increase its production quotas, with sentiment also soured by the reimposition of mobility restrictions following the rapid spread of the delta variant of the coronavirus says Platts.
Middle East crude
- Spot tenders by Asian refiners and Middle East producers remain in focus.
- India’s crude demand continues to grow as refiners increase oil imports following Indian Oil Corp.’s tenders for sweet and sour crude loading in September.
- Traders await the results of Thailand’s IRPC sour crude tender as well as Surgutneftegaz tender offering ESPO Blend crude for September loading.
- Dubai cash/futures (M1/M3) averaged $2.52/b in the week ended July 16, against $2.58/b in the week ended July 9.
- Inter-month spreads were narrower during midmorning trade July 19, with September/October pegged at 69 cents/b, down 4 cents/b from the Asia close July 16.
- September Brent/Dubai Exchange of Futures for Swaps spread was pegged at $3.74/b midmorning July 19, narrowing 4 cents/b from the Asia close July 16.
Asia-Pacific regional crude
- Traders await to evaluate cash premiums for Australia’s North West Shelf condensate as an absence of key condensate buyer — Indonesia’s TPPI — face off with recovering naphtha cracks.
- Trades on Papua New Guinea’s Kutubu Light and Australia’s Ichthys condensate will be in focus this week following the release of the September loading program, and market participants will also await clarity on the September loading program for Australia’s Cossack.
- Tender results for September loading barrels of Sokol crude are expected to emerge following a wider Brent/Dubai EFS on month, favoring the Dubai-linked crude and condensate grades. Market activities for Sakhalin Blend are also expected to kick off this week.
- On Malaysian crude, traders will be looking out for the outcome of Brunei Energy’s Kimanis tender and trades for other Malaysian grades, as cash premiums were seen to find firm footings following a trade by ConocoPhillips last week, coupled with resilient product cracks.
- Traders will be watching out for the tender results of PetroVietnam Oil’s Ruby, SV-DN, and Bunga Kekwa crude. Cash premiums for the Vietnamese grades are expected to maintain their momentum amid a backward market structure and limited arbitrage barrels flowing to Asia.
Tender and trade activities for August loading barrels of Sudan/South Sudan’s heavy sweet crude Nile Blend are in focus, where sentiment is expected to remain firm amid stronger marine fuel oil product cracks.
Delivered crude
- Tender activity from Taiwan’s CPC Corp. for October delivered sweet crude will be in focus this week.
- Market participants watch on-demand from Chinese independent refineries for October-arrival cargoes of Brazilian Tupi crude amid limited Chinese crude import quotas.
Crude futures
- Crude oil futures have started the week lower, after the OPEC+ reached a deal to raise production by 400,000 b/d each month starting in August, amounting to a 2 million b/d total increase by the end of the year.
- The OPEC+ resolution also extends the coalition’s supply management pact through to 2022, with the UAE, Saudi Arabia, Russia, Iraq, and Kuwait receiving boosts to their reference production levels, from which quotas are determined.
- Meanwhile, the spread of the delta variant of the coronavirus remains a point of concern for the market, as a surge in COVID-19 infection numbers may prompt countries to reimpose oil demand-sapping mobility restrictions.
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Source: Platts
