Singapore — The crude oil market in Asia started the week of Sept. 21 weaker as sentiment softened on expectations of higher supply amid a fragile recovery in global oil demand, after Libya lifted its force majeure on oil fields and ports.
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Register NowNovember ICE Brent crude futures was pegged at $43.04/b at 0200 GMT Sept. 21, down 46 cents/b from the Asian close Sept. 18.
MIDDLE EAST CRUDE
**Activity winds down in the week starting Sept. 21 following a flurry of spot trading and tenders last week.
**Dubai cash/futures (M1/M3) spread strengthened slightly after ADNOC announced a 25% cut in term volumes for October. This follows a 30% cut for September.
**The M1/M3 spread recovered to a discount of 48 cents/b at the Asian close Sept. 18, from a discount of 77 cents/b at the start of the week on Sept. 14.
**Spot market differentials for sour crude grades rebounded slightly due to the sharp OSP cuts, but trading levels remained rangebound as demand fundamentals showed little signs of improvement.
**Intermonth spreads were little changed mid-morning Sept. 21 compared to late last week. October-November was pegged at minus 18 cents/b at 0200 GMT, widening 1 cent/b from the Asian close Sept. 18.
**The prompt month Brent/Dubai Exchange of Futures for Swaps spread remained in negative territory. November EFS was pegged at minus 14 cents/b, narrowing 15 cents/b over the same period.
ASIA-PACIFIC CRUDE
**In the condensate market, the outcome of Qatar Petroleum's tender for November loading Low Sulfur Condensate will be seen this week. Preliminary spot trade levels for November loading LSC cargoes were reported at discounts of around $3/b to Platts Dubai on a FOB basis, although further details were not immediately clear.
**Market participants would also be looking out for more spot trade of November loading Australian North West Shelf condensate after spot and term deals were concluded by BP and BHP earlier in the month. Price differentials are expected to be supported by improving naphtha and gasoline margins, while downside remains from poor demand and lower refinery run rates.
**Spot trade activity for various November loading Malaysian grades is expected to be concluded in the week beginning Sept. 21. It was reported that Petronas had already moved one November loading cargo of Malaysia's Labuan crude, while Kimanis and Bertam are expected to trade in the week beginning Sept. 21.
**For Australian heavy grades, spot trade activity for November loading Vincent crude is expected the week beginning Sept. 21, following a trade reported for competing Pyrenees crude on Sept. 18. Price differentials for Vincent are expected to weaken after Pyrenees traded at Platts Dated Brent plus around $5/b, versus a $7/b premium last month.
DELIVERED ASIA CRUDE
**In the delivered crude market, more spot trade activities are expected for US WTI Midland. Valuations for December delivery cargoes were around the low to mid-$1s/b to Platts Dubai, on a DES basis.
**For Brazilian Lula crude, December delivery cargoes were last concluded at premiums of around 40-50 cents/b to February ICE Brent futures, on a DES basis. With demand from Chinese independent refiners remaining weak, with no signs of any fresh quotas being granted, not much spot activity is expected during the week.
CRUDE FUTURES
**Crude futures rose in the week ended Sept. 18 after the global Brent marker and front-month WTI recorded a 9% and 10% weekly increase, respectively, to settle at $43.15/b and $41.11/b on Sept. 18.
**A larger than expected drawdown in US crude inventory and a toughened stance from Saudi Arabia and Russia on the OPEC+ compliance laggards had boosted sentiment.
**Saudi energy minister Prince Abdulaziz bin Salman Sept. 17 said he had secured commitments from OPEC+ compliance laggards to make good on their pledged crude production cuts by Dec. 31.
**The prompt intermonth timespread for Brent swaps at the Asia close inched a cent higher to a weekly average of minus 50 cents/b for the week ended Sept. 18.
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Asia crude - Key market indicators this week - S&P Global
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