Key producers are expected to raise their official selling prices for crude oil in coming days on the back of a stronger Middle East market structure. The Dubai crude market structure, a key component in Saudi Arabia's calculations, strengthened further in November on strong demand in Northeast Asia and sustained export cuts. But some traders said weak fuel oil margins and competitive prices for alternative grades could curb any increase in OSP differentials for medium and heavy crude grades. Associate Editor Charlotte Rao looks at this and other factors that could drive commodity prices this week.
Join our conversations on Twitter - use #PlattsMM and connect with us.
Video Transcript
This week, Middle East crude prices set to rise, winter demand pushes LNG close to 10 dollars, and Australian wheat crops hit by heavy rain.
First, in oil, producers are expected to raise their official selling prices for crude oil in coming days on the back of a stronger Middle East market structure.
The Dubai crude market structure, a key component in Saudi Arabia's calculations, strengthened further in November on strong demand in Northeast Asia and sustained export cuts.
But some traders said weak fuel oil margins and competitive prices for alternative grades could curb any increase in OSP differentials for medium and heavy crude grades.
Elsewhere in oil, China is expected to release its preliminary import/export data for November on Friday. Market sources expect it to show a rebound in crude imports from a 12-month low in October.
Oil products exports are also expected to rise from October, supported by robust gasoline exports, which rebounded from a 22-month low in September.
In LNG, traders are watching to see if more Asian end-users will step back into the market this week to procure cargoes to meet peak winter demand.
The Platts JKM is approaching the 10 dollar mark due to healthy demand, production disruptions in Indonesia and delayed nuclear restarts.
In thermal coal, the market is waiting for the Chinese government to signal whether its informal ban on imports at certain ports will be lifted.
There are currently 130 ships laden with coal waiting off China’s coast after several ports were banned from receiving them in early October.
In metals, negotiations for Japanese aluminum contracts for the first quarter of 2018 are expected to start this week in Tokyo.
Some producers have offered at up to 26 percent higher than Q4 this year, at 110 to 118 dollars per metric ton, CIF Japan.
So, will the Q1 premiums rebound that much after Q4 levels fell 20 percent from Q3?
Join our conversation on Twitter with #PlattsMM.
In agriculture, Australia's wheat market could firm this week after heavy rain over the weekend across southern and eastern Australia, which could impact crop quality and the progress of the harvest.
Domestic prices in eastern Australia spiked 10 dollars last week on the approach of the severe weather, and the extent of the impact will emerge this week as the cleanup begins.<
In shipping, Capesize freight rates in both the Asia Pacific and Atlantic are expected hold firm this week. This comes after freight levels hit a year-to-date high last week as mining majors rushed iron ore cargoes out of Western Australia.
Thanks for kicking off your Monday with us and have a great week ahead!