Singapore — The crude oil market opened the week firmer Monday morning in Asia, with trading activity for July-loading cargoes expected to go into full swing this week.
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Register NowJuly ICE Brent crude futures were at $33.76/b at 0200 GMT Monday, up $1.61/b from the 0830 GMT close in Asia on Friday.
MIDDLE EAST CRUDE
**July Dubai futures were pegged at $34.10/b in mid-morning trade in Asia Monday, up $1.24/b from Friday's Asian close.
**Intermonth spreads were, however, weaker Monday, with June/July pegged at minus 12 cents/b and July/August at minus 24 cents/b at 0145 GMT, compared with minus 1 cent/b and minus 17 cents/b, respectively, at the 0830 GMT Asian close Friday.
**The Brent/Dubai Exchange of Futures for Swaps spread was pegged at minus 34 cents/b Monday morning, compared with minus 71 cents/b at the Asian close Friday.
**Trading of July spot cargoes is expected to gear up to full speed after spot price differentials moved up sharply last week.
**Middle East market participants will also keep a close eye on Dubai futures timespreads, which flirted with backwardation briefly before flipping back into a contango. The move
would "draw out all the storage [barrels]," said an end-user, adding that "when the market becomes backwardated, sellers will have incentive to bring out cargoes from storage."
**The Brent/Dubai EFS could also flip back into positive territory after several months of Dubai being at a premium to ICE Brent futures.
**This week, the market will participate in tenders from end-users such as Taiwan's CPC and Formosa Petrochemical, Japan's Fuji Oil as well as Russian ESPO offers from various sellers.
ASIA-PACIFIC CRUDE
**The Asian regional market will be looking out for more spot trades to emerge for the July-loading cycle after an uptick was seen last week, supported by improved trader sentiment.
**Tender results for the second Sokol cargo from India's ONGC is expected this week, with market participants eager to see if the higher levels from the first tender result would be maintained.
**Traders would also be watching out for tender results from Vietnam's PV Oil for their July-loading Chim Sao, Ruby and Su Tu Den crude grades, with some traders expecting
price differentials to be higher this month amid an improvement in demand.
**In the lighter crude and condensates grade category, traders would be looking out for any spot trades for Australia's North West Shelf -- none of the July-loading barrels were
reported to have traded so far - and Russia's Sakhalin Blend.
DELIVERED CRUDE MARKET
**In the delivered market, traders would be looking out for spot trades on US WTI Midland crude delivered to Asia after offers improved last week to $2/b against October ICE Brent futures for August delivery cargoes.
**More spot deals for Brazilian Lula could also be expected this week amid a rise in demand from Chinese independent refiners, after some spot deals at around $1/b against October ICE Brent futures for August delivery cargoes were reported last week.
CRUDE FUTURES
**Signs of an easing supply glut and gradually recovering demand appear to be supportive of the recent rally.
**Contango structures narrow but unlikely to return to backwardation for now. Brent swaps June/July timespread stood at minus 48 cents/b at Friday's Asian close, narrowing from minus $1.31/b at the start of May.
**Signs of slowing US production and OPEC+ cuts helped to ease the supply glut, though storage constraints still remain.
**Concerns also prevail over a possible second wave of COVID-19 infections, which could hamper demand recovery.
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May 18, 2020 at 10:03AM
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Asia crude - Key market indicators this week - S&P Global
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