Singapore—Asia's crude oil market started the week of March 22-26 on a soft note as the trade cycle for spot May-loading barrels nears its end and a bearish sentiment develops amid weakening product cracks.
MIDDLE EAST CRUDE**Trade activity in the week is likely to ease as purchase activity from Asia stays low and trade for May-loading barrels nears completion.
**Intermonth spreads widened during morning trade March 22 with May-June pegged at 50 cents/b, up 3 cents/b from the Asian close on March 19.
** May Brent-Dubai Exchange of Futures for Swaps was pegged at $2.26/b in Asia early March 22, down 5 cents/b from the Asian close on March 19.
**A spate of tenders dominated last week's trade activity. Taiwan's CPC was heard to have bought 2 million barrels of Upper Zakum crude and a 500,000-barrel cargo of Qatar Land, while Thailand's IRPC bought a cargo each of May-loading Banoco Arab Medium and Murban crude.
**Bahrain's BAPCO sold a 500,000-barrel April-loading cargo of Banoco Arab Medium crude, while Russia's Surgutneftegaz sold nine May-loading ESPO crude cargoes to oil majors and traders.
**Qatar Petroleum awarded their Al-Shaheen tender offering two 500,000-barrel May-loading cargoes of Al-Shaheen crude and a 500,000-barrel cargo each of April-loading Qatar Marine and Qatar Land crude. The Al-Shaheen cargoes were reportedly sold to Japanese buyers, while the Qatar Land and Qatar Marine cargoes were heard sold to an Indian buyer and a South Korean buyer, respectively.
**Traders awaiting results of tenders issued by Taiwan's Formosa Petrochemicals and India's MRPL for May.
ASIA PACIFIC CRUDE**The market will keep a lookout for trade of the last May-loading Australian North West Shelf condensate cargo, after two previous cargoes reportedly traded at small premiums to Platts Dated Brent assessments, FOB. Weakness in naphtha cracks amid refinery turnaround season in Northeast Asia are expected to limit the potential price upside for the ultra-light sweet condensates.
**Trading activity for June arrival Far East Russia's Sakhalin Blend is expected to kick off March 22-26. May-arrival cargoes had previously traded at premiums of around low to mid-$1s/b against Platts front month Dubai assessments, CFR Yeosu.
**Traders will keep watch on trade details of May-loading Australia's Cossack and Papua New Guinea's Kutubu light sweet condensates amid falling naphtha cracks.
**Traders anticipate outcome of several tenders from Vietnam's PV Oil, including Su Tu Den, Thang Long and Nam Con Son for fresh price cues on May-loading regional crude grades. Premiums of Vietnamese crudes to Platts Dated Brent were resilient on the month, however, a longer program from PV Oil compared with the previous month and sagging fuel oil cracks may limit the potential upside on Vietnamese crude prices.
**Market participants will keep an eye on trade activity for Malaysian crude grades following a longer program heard for Kimanis crude -- nine cargoes available for May versus seven for April. Brunei Energy was heard offering two cargoes of Kimanis for May 8-12 and May 20-24 loading via tenders. Results may be announced this week.
**Traders will watch for any April loading Nile Blend and Dar Blend trading activity as well as trades in Australia's Vincent. Sentiment for heavy sweet crude is expected to remain low following decline fuel oil cracks.
DELIVERED CRUDE**Traders are keeping a wary eye on Chinese seaborne demand for June delivered Brazil's Tupi crude. Brazil's Petrobras was last heard to have sold 950,000 barrels of Tupi to a Chinese teapot at a premium of $1.35/b over ICE Brent, DES Qingdao for June delivery. However, weak demand across Chinese refineries has impacted interest for Tupi, with premiums expected to remain suppressed.
**US WTI Midland crude deals have fallen as Asian buyers favor Dubai-linked crude grades, despite Taiwan's CPC having bought 1 million barrels of WTI Midland crude for June delivery at a premium of below $2/b to Platts Dated Brent crude assessments, CFR.
CRUDE FUTURES**Crude oil futures enter the week plagued by coronavirus woes, sluggish vaccine rollouts and extended lockdown measures. These have cast a shadow over the prospect of an expedited recovery in global oil demand.
**The prospect of supply-side headwinds in the medium term has also dampened market sentiment as analysts are concerned OPEC+ may announce an easing of its production quotas in the coalition's April meeting.
**On account of the coronavirus fears, and supply-side uncertainty, the May contract for Brent had ended last week 6.78% lower at $64.53/b, whereas the April contract for NYMEX light sweet crude had plummeted 6.39% to $61.42/b.
**Analysts said the sharp downward correction came as the market finally priced the hurdles to an improvement in the supply-demand equation, including Europe's protracted struggle with the pandemic and OPEC+ spare capacity.
