Petrotahlil — The crude market in Asia started the week firmer, with the spot trading cycle for June-loading cargoes expected to ramp up across the Middle East and Asia-Pacific crude markets in coming days.
June ICE Brent crude futures stood at $27.82/b at 0225 GMT Monday, up 5 cents/b from the 0830 GMT close in Asia last Friday.
MIDDLE EAST CRUDE
** June Dubai derivative rose 34 cents/b from Friday's Asian close to around $31.72/b in mid-morning trade in Asia Monday as the Middle East sour crude futures complex continued to strengthen following the announcement of OPEC+ supply cuts.
** Intermonth spreads were mixed Monday, with the May-June spread pegged at minus $3.25/b and the June-July at minus $1.60/b at 0220 GMT, compared with $3.43/b and minus $1.81/b, respectively, at the 0830 GMT Asian close Friday. The Brent/Dubai Exchange of Futures for Swaps was pegged at minus $3.90/b Monday morning, compared with minus $3.61/b at the Asian close Friday.
** June trading kicked off with Qatar's monthly tender setting the tone for a discounted spot market in April. Al-Shaheen and Qatar Land and Marine cargoes were sold in deep discounts in the range of minus $9-$10/b to Platts front-month Dubai crude assessments.
** More spot tenders are expected to emerge this week, as are standalone cargoes of Abu Dhabi crudes such as Murban, Das Blend and Upper Zakum. Expectations are for most cargoes to trade in deep discounts
** Trading for Russia's ESPO blend crude will also progress through the week, with the month's first Surgut tender having concluded last week. The two ESPO cargoes offered in the tender were sold at discounts of around $4.50/b-$5/b to Dubai.
** A cargo of Murban crude was declared on a convergence of Oman partials in the Platts Market on Close assessment process Friday, the first declaration in the Platts Middle East sour crude MOC process for April.
** Qatar Petroleum's tender for June-loading deodorized field condensate and low sulfur condensate is likely to be re-tendered this week as the first tender did not see any cargoes awarded, traders said.
** The outcome of China buyer Fuhaichuang Petroleum's tender seeking around 1-2 condensate cargoes for delivery over H2 June-H1 July delivery are likely to emerge this week. Some traders said QP might be looking to sell its condensates into this tender.
** Market participants are awaiting the June-loading program for Malaysian crude grades this week. Traders noted that some June-loading Labuan barrels were already being offered at discounts of around $1-$2/b to Platts Dated Brent on a FOB basis.
** Tender results for Vietnamese grades including Thang Long and Ta Giac Trang are expected to emerge this week. These cargoes are expected to be awarded at discounts to Dated Brent, in line with the discounts heard awarded for other Vietnamese crude tenders such as Ruby and Chim Sao last week.
** The outcome of ExxonMobil's tender for June-loading Sokol crude cargoes this week could shed further light on the value of the Far East Russian grade. A Sokol cargo for loading over June 16-22 last traded at a discount of around $5.75/b to Dubai and prior to that, a June 2-8 loading cargo traded at a record low discount of $8/b to Dubai on a CFR basis.
DELIVERED ASIA CRUDE
** Market participants are watching out for any trades of Brazilian Lula crude into China this week after trade levels dropped to discounts of around $3.50/b to August ICE Brent Futures for June-delivered cargoes.
** For US WTI Midland crude, traders are on the lookout for a CPC Taiwan buy tender, which may be issued this week. CPC skipped issuing its monthly tender last month for June arrival due to run cuts.
** The market structure is expected remain in a steep contango this week, despite the recent OPEC+ deal, even though slight recovery is expected.
** Demand for oil storage is expected to surge rapidly as a steep contango provides more incentive for market participants to stock oil for later use.
** Recent builds in US crude inventories have added to oversupply concerns in global oil markets.
** Analysts say that while COVID-19 lockdown measures have eased in some countries, the near-term outlook remains volatile in case of further demand shocks amid a backdrop of oversupply.