SINGAPORE: The focus of the Middle East spot crude market this week will be the release of official selling prices (OSPs), as refiners and traders calculate their requirements and gauge market sentiment for the front-month July trading.
In the Asia-Pacific crude market, unsold June condensate cargoes are under pressure, as the market is gradually shifting to July trading, with a series of Vietnamese and Russian tenders to be awarded.
Traders expect the oil kingdom to raise the price of Arab Light crude heading to Asia on healthy gas oil cracks.
However a poll of seven refiners and traders showed different views on the prices of Arab Medium and Arab Heavy grades, with four saying Saudi Aramco is likely to raise the differentials of those grades after cutting them to their lowest in 15 months for May.
State oil firms Abu Dhabi National Oil Co (ADNOC) and Qatari Petroleum are both expected to release their retroactive April OSPs this week.
Traders expect ADNOC to raise differential between Murban OSP and Dubai by 10 to 20 cents after the grade was sold at stronger premiums on the spot market last month.
Unsold Asia-Pacific condensate lots are likely to pressure differentials into wider discounts this week. So far, only one North West Shelf condensate lot has been sold, out of six available for June loading, traders said.
Rosneft has closed its June-July loading ESPO tender and some traders expect discounts for the grade to stay below $1, similar to recent deals.
The top Russian oil producer has moved forward the marketing of its July loading cargoes to be in line with Middle Eastern grades, allowing buyers and sellers more time to react to the large supplies, traders said.
PV Oil will conclude this week talks with term buyers for Su Tu Den crude for loading between July and December.
PV Oil, which issues the term tender biannually as a means to set the grade’s official selling price, is offering its cargoes at $4.40 a barrel premium to Minas formula, 40 cents a barrel higher than the previous OSP set for barrels loading between January and June.
However, the recent strength in the Minas price benchmark and the unexpected release of more Bach Ho crude supplies may cap or lower its premium compared with the previous deal, traders said.
The company will also award Wednesday two Bach Ho lots for May and June-loading.
India’s ONGC has closed its July-loading Sokol crude tender and premiums are expected to stay high on support from strong middle distillates cracks, traders said.
In early April, Rosneft sold a June-loading Sokol lot at a premium of exceeding $4.50 a barrel to Dubai quotes, the biggest premium in 17 months.
The June Brent/Dubai Exchange of Futures for Swaps (EFS) fell to 90 cents on Monday, down 14 cents from the Asian close on Friday.
June ICE Brent was down 11 cents at $87.33 at 0451 GMT.