New York—The crude oil market in Asia was higher at the start of the week of March 29 as participants maintain a close watch on the evolving situation in the Suez Canal and the upcoming OPEC+ meeting.
May ICE Brent crude futures were pegged at $64.36/b at 0247 GMT March 29, up $1.06/b from the 0830 GMT Asian close March 26.Middle East crude** Trading activity is expected to ease further in the week as demand from Asian buyers remains dormant and focus shifts to the next trading cycle.
** Market participants expect the OPEC+ meeting scheduled for April 1 to rollover production cuts amid low demand and renewed pandemic concerns.
** Tender activity was tepid in the week to March 26, with most buying requirements fulfilled. Russia's Gazpromneft sold two May-loading cargoes of ESPO crude at premium of around $1-$1.5/b to Platts Dubai.
** Dubai cash/futures (M1/M3) averaged $1.15/b in the week ended March 26, against $1.09/b in the week ended March 19.
** Intermonth spreads widened in mid-morning trade March 29, with May/June pegged at 59 cents/b, up 5 cents/b from the Asia close March 26.
** The May Brent/Dubai Exchange of Futures for Swaps was pegged at $2.22/b at the opening of Asia trade March 29, up 1 cent/b from the Asia close March 26.
Asia-Pacific crude** Australia's North West Shelf condensate cargo scheduled for May 25-29 loading could conclude at a later date as demand for condensates remains lackluster, traders said.
** Traders will evaluate the impact of falling naphtha cracks from the trade for Australia's May loading Cossack, where a similar sized cargo was concluded earlier in the month at a premium in the low- to mid-$1s/b to Platts Dated Brent assessments, FOB.
** Traders will also be closely watching the outcome of tenders from Vietnam's PV Oil for Sao Vang and Dai Nguyet (SV-DN) and Nam Con Son condensate, following tender results for other Vietnamese grades including Chim Sao, Ruby and Su Tu Den crudes that were heard stable to higher on the month.
** For the heavy sweet crudes, the outcome of tender results for Sudan/South Sudan's April loading Nile Blend and Dar Blend are awaited as sentiment remains weak amid retracting fuel oil cracks.
** Australia's Vincent May-loading cargo will also be in focus as a dearth of spot Pyrenees cargoes available for May-loading could offer some support to the Vincent crude price. An April-loading Vincent was last heard sold to an oil major at Dated Brent plus around $13/b FOB.
** For official selling prices, market participants will be awaiting the release of March Malaysian Crude Oil (MCO) prices, Brunei's February OSP and the March Indonesian Crude Price later in the week.
Delivered crude** Demand fundamentals across Chinese independent refineries remain tepid, dampening sentiment for delivered Brazilian Tupi. Offer prices were heard to remain suppressed following a trade for June delivery Tupi concluded by Brazil's Petrobras to a Chinese independent refiner at a premium of $1.35/b to ICE Brent, DES Qingdao.
** Premiums for the US' WTI Midland crude to Asia are expected to fall amid muted Asian demand as buyers opt for Dubai-linked crude grades due to the wide Brent-Dubai spread.
Crude futures** Global markets are keeping a close watch on the evolving situation in the Suez Canal, which is currently blocked by the Ever Given container ship. The critical commodity chokepoint facilitates almost 10% of total seaborne oil trade and the blockage has already hindered the passage of numerous oil tankers. Market sources expect the backlog in global shipping traffic at the canal to take weeks to clear.
** The May contract for Brent ended the week to March 26 down 0.06% from the week before at $64.57/b, while the May contract for NYMEX light sweet crude edged 0.76% lower to $60.97/b. The apparent stability in oil prices over the preceding two weeks masks the volatility seen on a daily basis as markets react to developments in the pandemic in Europe and the situation in the Suez Canal.
