Singapore — The crude oil market in Asia started the week of Aug. 24 lower amid uncertainty over demand and supply growth, and as Libya's National Oil Corp. are expected to resume oil exports following a ceasefire at a time when the OPEC+ alliance is tapering production cuts.
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Register NowOctober ICE Brent crude futures were pegged at $44.35/b at 0300 GMT on Aug. 24, down 40 cents/b from the Asian close on Aug. 21.
MIDDLE EAST CRUDE
**Most buyers have wrapped up purchases of October-loading cargoes, but there was still spot supply available in the market.
**Light grades have seen slightly improving uptake from Japanese and Indian refiners for the October cycle, with differentials edging slightly higher into last week.
**The Dubai cash/futures (M1/M3) spread averaged at a discount of 62 cents/b in August so far, sliding from an average premium of 71 cents/b in July, S&P Global Platts data showed.
**October Dubai futures were pegged at $44.25/b in mid-morning trade Aug. 24, down 41 cents/b from the Asia close on Aug. 21.
**Intermonth spreads' contango narrowed in mid-morning trade Aug. 24. The September/October spread was pegged at minus 42 cents/b, 4 cents/b higher than the Asia close on Aug. 21.
**The October Brent/Dubai Exchange of Futures for Swaps spread was pegged at plus 10 cents/b, a tad wider than the 9 cents/b assessed at the Asia close on Aug. 21.
**Sour crude market participants will be evaluating their expectations for the next round of official selling prices this week.
ASIA-PACIFIC CRUDE
**In the condensate market, participants await further spot trades for October-loading Australian North West Shelf condensate, which is expected to trade in steep discounts amid poor product margins and unsold cargoes from the September-loading cycle, including Khuff condensate.
**Participants will also be on the lookout for tender results from China's Fuhaichuang Petrochemical, which is seeking condensate for October delivery.
**For medium sweet barrels, spot trades are expected for Malaysia's Labuan crude, with offers now reported close to a $2/b premium to Platts Dated Brent on a FOB basis.
**Tender results for Vietnamese grades, including Ruby, Thang Long, Bunga Orkid and Bunga Kekwa are also expected this week. Bunga Orkid and Bunga Kekwa are expected to trade at discounts as they are high pour crude grades, making them difficult to blend during winter.
**Market participants would also be looking for spot trade for October-loading Australian heavy sweet crude, Vincent, which some traders said were offered close to $8/b over Platts Dated Brent on a FOB basis.
DELIVERED ASIA CRUDE
**Demand remained sluggish among Chinese independent refiners, as domestic margins were poor and there was a lack of fresh crude import quotas.
**Brazilian Lula crude last traded at a premium of around 30 cents/b to January ICE Brent futures for November delivery cargoes, and are expected to trade even lower in the week beginning Aug.24.
**For US WTI Midland, market participants would be looking out for a buy tender from Tawian's CPC, which in July bought 500,000 barrels of October delivery WTI crude around the mid-$1s/b to Platts Dated Brent, DES Taiwan.
CRUDE FUTURES
**Crude futures were largely steady for the week ended Aug. 21, despite concerns over a slowing economic recovery and energy demand.
**The prompt intermonth timespread for Brent swaps also remained firmly in a contango structure; averaging minus 48 cents/b in the week ended Aug. 21, compared to minus 38 cents/b the week before.
**OPEC+ strong focus on compliance and compensation cut proved to be supportive for the global crude complex, even as they stuck to the 7.7 million b/d production cuts.
**Members who overproduced in May, June and July will have to cut a combined extra 2.31 million b/d as compensation by the end of September. Analysts estimate that approximately 1.2 million b/d of additional cuts are needed to offset oversupply to date, implying OPEC+ production cuts will be closer to 8.9 million b/d instead.
**Traders will be keeping their eyes on the continued spread of COVID-19 infections worldwide, especially as countries struggle to contain fresh outbreaks and key European economies record daily high infections since late April or May.
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August 24, 2020 at 11:11AM
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Asia crude - Key market indicators this week - S&P Global
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