Middle East Crude

Saudi Aramco plans to provide term supplies to its term buyers in Asia for June-loading in line with contractual volumes. Saudi Aramco was also believed to have accepted requests from some term buyers for incremental supplies to a certain extent. Crude inventories owned by Saudi Aramco have increased, enabling the company to respond to requests for additional term supplies. The May-loading OSP for Saudi grades were sensed as expensive, so that demand from some term buyers like China declined. "Falling intakes for Saudi grades from China led to rising inventories by Saudi Aramco, so that the company was able to provide more term supplies," said an end-user in Northeast Asia. Reductions in the June-loading OSP formulas by Saudi were larger than market expectations as reported.

African/European/Russian/American Crude

Spot differentials for June-loading African grades such as Angolan grades strengthened. Europe officially announced that it would ban Russian crude imports, reversing market sentiment on a bullish side. This week, China International United Petroleum and Chemicals Co (UNIPEC) purchased June-loading Cabinda. The seller was said to be US Chevron and the cargo fetched a premium of around $2.50 to Dated Brent.

Asia Pacific Crude

In trade for Malaysian crude, Kimanis supply was expected to fall due to production problems. The loading schedule for Kimanis in July was not yet released in view of production disruptions. Kimanis supply had been about seven cargoes (600,000 bbls each) a month recently, lower than before. But with the problems this time, supply might drop further. Although the extent of the impact was unclear, the buying of competitive grades such as other Malaysian crude including Labuan and Vietnamese crude might cause these markets to strengthen.