Oil prices are expected to be supported in the week ended June 3 as refined product inventories worldwide remained tight and the EU continued to push for a ban on Russian oil imports. The front-month ICE Brent and NYMEX crude contracts were hovering at highs not seen since late-March, reports SP Global.
Middle East crude
Focus in the Middle East crude market moves to the new cycle starting June 1 for August-loading crude with market participants eyeing official selling prices and the upcoming OPEC+ meet.
July OSPs are expected to be raised by at least $1.50/b across all grades given the strong performance of Middle East medium sour and light sour crudes in June.
The OPEC+ alliance, which is scheduled to meet on June 2, is expected to proceed with its regular output increase, doing little to ease the supply constraints faced by the Asian buyers.
Most July-loading Middle East grades continue to clear with some end month buying seen last week by Taiwan’s Formosa, India’s IOC and China’s Rongsheng.
Dubai cash/futures (M1/M3) averaged $5.11/b in the week ending May 27, against $5.54/b in the week ended May 20.
Intermonth spreads were stable at mid-morning trade May 30 with July/August pegged at $2.47/b, unchanged from the Asia close May 27.
July Brent/Dubai Exchange of Futures for Swaps was pegged at $11.65/b at mid-morning May 30, up 76 cents/b from the Asia close May 27.
Asia Pacific crude
Trading activity in the Asia Pacific sweet crude market for July-loading barrels is expected to remain thin, with most end-users having already fulfilled their procurement requirements.
Market participants will be looking out for any subsequent trades on July-loading barrels of Australia’s North West Shelf condensate, after Indonesia’s Pertamina procured condensate barrels for July delivery.
Fresh trading cycle for Far East Russian grades will commence during the week, with traders keeping a lookout for market activities on August-loading barrels of Sokol crude.
For regional crudes, market participants will monitor any spot trades across the Malaysia’s MCO crude basket, including July-loading barrels of Miri and Kikeh crudes.
On heavy sweet crudes, trade details for July-loading barrels of Australian heavy sweet crudes could emerge this week, amid a recent uptick in LSFO product cracks.
On Official Selling Prices, traders are expecting to see May Malaysian MCO OSP, Indonesia’s May ICP and Brunei’s April OSP this week.
Market sources will keep an eye on trades for remaining August delivery barrels of US WTI Midland into Asia amid a wider NYMEX/WTI Brent spread on the week.
Traded levels for Brazilian Tupi crude could remain sideways amid an uptick in demand from national oil companies coupled with sluggish sentiments from Chinese independent refineries.
Latest positioning data from the Intercontinental Exchange showed money managers raising their net longs in ICE Brent crude by 12,639 lots on the week to 197,072 in the week ended May 24, a high not seen since early March. Analysts said that net longs have likely increased even further since then with the recent sustained rise in crude oil prices.
Investors were watching for further developments after Iran on May 27 seized two Greek oil tankers, one loaded with a cargo from Basrah, Iraq, according to Iran’s official IRNA news agency. Media reported indicated that the seizures were in response to Greece taking control last month of an Iranian oil tanker at the behest of the US.
In the week ended May 27, the international crude oil benchmarks were higher with the July contract for ICE Brent futures up 6.1% on the week to settle at $119.43/b, while the July contract for NYMEX light sweet crude was 4.3% higher at $115.07/b.
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Source: SP Global