Singapore — The crude market in Asia started the week lower midmorning on June 29, with the Middle East sour crude market entering a new trading cycle midweek, and fresh rounds of official selling prices issuance foremost in participants' mind following the conclusion of the August-trading cycle on June 30.
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Register NowICE August Brent crude futures stood at $40.45/b at 0200 GMT on June 29, down $1.08/b from $41.53/b at the 0830 GMT close in Asia on June 26.
MIDDLE EAST CRUDE
**August Dubai derivative fell $1.34/b from the Asian close on June 26 to around $39.44/b on the morning of June 29, tracking global crude oil prices.
**Intermonth spreads were wider midmorning June 29, with the July-August spread pegged at 53 cents/b and the August-September spread pegged at 7 cents/b. This compares with 45 cents/b for July-August and 12 cents/b for August-September at the Asian close on June 26.
**Brent/Dubai Exchange of Futures for Swaps was pegged at $1.01/b at midmorning on June 29, up from the 75 cents/b at the Asian close on June 26.
**The August-loading trading cycle for Middle East crude cargoes will wrap up June 30, with market participants expected to evaluate their expectations for the upcoming OSPs issued by the region's producers.
**The Dubai cash-futures spread, a key Middle East sour crude market indicator tracked by Middle East producers to define the core direction and extent of price hikes or cuts, has averaged at a premium of 79 cents/b in June so far – the widest since January, and up $1.94/b from an average of minus $2.73/b over May.
**UAE's Abu Dhabi National Oil Co. will cut term volumes in August by 5% for all four grades, similar to the 5% cut that ADNOC made for July, a source familiar with the situation told S&P Global Platts on June 28.
ASIA-PACIFIC CRUDE
**With most August-loading barrels having already changed hands, trading activity on the Asian regional crude market is expected to be muted for the week beginning June 28.
**Market participants would be looking out for OSPs for July loading barrels from countries, including Malaysia and Indonesia.
**With the initial strength in price differentials seen for August loading cargoes starting to ease toward the end of the trading cycle, market participants would look out for signals from the market, including OPEC and OSP announcements, to see if the strength can sustain into the September loading cycle.
**While demand from China was sluggish, demand from other regions in Asia is expected to pick up, traders said.
DELIVERED CRUDE MARKET
**In the delivered crude market, demand from independent refiners in China was sluggish amid poor domestic margins as well as adequate supply from stockpiling, traders said.
**Traders expect October delivery cargoes to start trading from the week beginning June 28 for both Brazilian Lula crude and US WTI Midland crude, and would be watching if there are more spot trades that happen for the same.
CRUDE FUTURES
**Mixed supply and demand drivers are likely to keep prices trading rangebound into the near term.
**Prompt-month market structure has been hovering near parity to a slight contango, after venturing into a short-lived backwardation.
**The prompt intermonth timespread for Brent swaps averaged minus 8 cents/b in the week ended June 27, narrowing from minus 17 cents/b the week before.
**Demand uncertainty is expected to cap recovery going into the third quarter, even as supply factors have earlier provided a short-lived boost to the structure.
**Concerns about the extent of demand recovery kept sentiment cautious amid a recent rise in global coronavirus infections.
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