Good morning. Crude oil futures edged lower in mid-morning trade in Asia Oct. 4 as the market looked for direction ahead of the OPEC+ meeting scheduled for later in the day.
At 10:35 am Singapore time (0235 GMT), the ICE December Brent futures contract was down 24 cents/b (0.30%) from the previous close at $79.04/b, while the NYMEX November light sweet crude contract was 27 cents/b (0.36%) lower at $74.67/b.
“Plenty of volatility is expected to be seen, not just because of the upcoming OPEC+ meeting, but also the festering energy crisis in Europe and China,” Vandana Hari, CEO of Vanda Insights, told S&P Global Platts Oct. 4, adding that challenges in assessing the impact on oil demand was also a contributing factor. Market focus on the OPEC+ meeting is on whether the alliance will increase output further than the already scheduled 400,000 b/d rise each month as supply disruptions and recovering demand push oil to near $80/b. With China reportedly in search of more supplies and US production still hobbled, OPEC+ has ample reasons to consider pumping beyond its current limit.
UOB market researcher in an Oct. 4 note said the group was slowly unwinding record output cuts made last year, with the market watching to see it will do more in terms of restoring output against the rise in crude oil prices. Amid speculation of a production increase, the oil market remains supported by the strength in natural gas prices, which are raising the attractiveness of fuel alternatives that in turn boost oil demand. “Shortfalls in LNG and thermal coal could see industries revert to oil products such as fuel oil, diesel and propane for their energy requirements,” ANZ research analysts said in a note Oct. 4.
Stocks of fuel oil in the Amsterdam-Rotterdam-Antwerp hub fell 4.9% week on week at 1.163 million mt as of Sept. 29, according to data from Insights Global.Insights Global does not differentiate between fuel type. Fuel oil stocks in the region represented 22.5% of total refined oil products stocks in the region, which is lower than the previous week’s percentage share at 23.7%.Mediterranean fuel oil traders have been reporting a scarcity of HSFO in the region over recent months. However, sources indicated that LSFO had experienced even more tightness in recent weeks. LSFO commonly sees increased demand as a power generation source in Mediterranean countries like Greece and Lebanon. HSFO is expected to remain tight, as local refineries continue to maximize low sulphur production and arbitrage pulls from Asia remain strong. Meanwhile, flat prices for several fuel oil grades hit multi-year highs as natural gas prices surge and power generating companies switch to fuel oil as a cheaper alternative.
Chinese authorities have reportedly ordered state-owned energy companies to build and ensure adequate reserves in order to secure supplies for winter at any costs as it battles an energy crisis.Market watchers said that if China’s state-owned energy companies have indeed been instructed to do “whatever it takes” to secure winter energy supplies, it is unlikely that oil prices could fall very far, even if most China buying occurs in the natural gas and coal markets.
OIL MARKET ROUND-UP:
* Oil Steadies Ahead of OPEC+ Producers Meeting on Supply Policy
* Saudis Triumph in Oil Market With Comeback From Covid Crisis
* Saudi Arabia’s Oil Revenue Surges Ahead of OPEC+ Meeting
* Oil Flows Jump From 31 Countries and Regions
Singapore 380 INDIC
Nov21 454.50 / 456.50
Dec21 449.00 / 451.00
Jan22 444.50 / 446.50
Feb22 441.00 / 443.00
Mar22 437.75 / 439.75
Apr22 434.50 / 436.50
Q1-22 441.25 / 443.25
Q2-22 431.25 / 433.25
Q3-22 421.75 / 423.75
Q4-22 412.25 / 415.25
CAL22 426.25 / 429.25
Rotterdam 3.5% INDIC
Nov21 434.00 / 436.00
Dec21 428.75 / 430.75
Jan22 424.75 / 426.75
Feb22 421.75 / 423.75
Mar22 418.75 / 420.75
Apr22 415.50 / 417.50
Q1-22 421.75 / 423.75
Q2-22 412.25 / 414.25
Q3-22 401.50 / 403.50
Q4-22 389.50 / 392.50
CAL22 405.75 / 408.75
Singapore VLSFO 0.5% INDIC
Nov21 550.75 / 555.75
Dec21 548.75 / 553.75
Jan22 546.25 / 551.25
Feb22 543.50 / 548.50
Mar22 540.75 / 545.75
Apr22 537.75 / 542.75
Q1-22 543.50 / 548.50
Q2-22 534.75 / 539.75
Q3-22 525.25 / 531.25
Q4-22 516.75 / 522.75
CAL22 529.75 / 535.75
Rott VLSFO 0.5% INDIC
Nov21 529.75 / 534.75
Dec21 527.00 / 532.00
Jan22 524.25 / 529.25
Feb22 521.50 / 526.50
Mar22 518.75 / 523.75
Apr22 516.00 / 521.00
Q1-22 521.50 / 526.50
Q2-22 513.00 / 518.00
Q3-22 503.50 / 509.50
Q4-22 494.50 / 500.50
CAL22 508.00 / 514.00
Sing 10ppm GO INDIC
Nov21 88.89 / 89.03
Dec21 88.29 / 88.49
Jan22 87.73 / 87.93
Feb22 87.23 / 87.43
Mar22 86.75 / 86.95
Apr22 86.28 / 86.48
Q1-22 87.25 / 87.45
Q2-22 85.83 / 86.03
Q3-22 84.52 / 84.72
Q4-22 83.33 / 83.53
CAL22 85.13 / 85.53
Ice Gasoil Swap
Nov21 673.49 / 675.49
Dec21 669.40 / 671.40
Jan22 665.59 / 667.59
Feb22 661.53 / 663.53
Mar22 657.12 / 659.12
Apr22 652.75 / 654.75
Q1-22 661.40 / 663.40
Q2-22 650.45 / 652.45
Q3-22 641.15 / 643.15
Q4-22 632.53 / 634.53
CAL22 645.89 / 648.89
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