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Market Movers Asia, May 28-June 1: Appetite grows for N. American crude; LNG summer trading off to strong start

With Edwin Loh

May 28, 2018 10:25:00 EST (2:40)

Asian demand for North American crude oil looks set to increase further this week after a recent rally in physical Dubai prices, and the release of higher-than-expected Saudi Aramco official selling prices. China kicked off its US crude buying spree last week, with Unipec buying 16 million barrels of US crude for loading in June, the biggest volume it has ever lifted in a single month.


Meanwhile, Asia spot LNG summer trading is off to a strong start, with prices rising swiftly to around $9/MMBtu last week. The Japan Korea Marker spot LNG price will start this week at a three-month high and discussions for July and especially August look strong.


In thermal coal, the market will be assessing the impact of South Korea's move to reduce the sulfur content of imports to 0.4% in a bid to improve air quality, as well as Beijing's measures to cool China's coal market.


S&P Global Platts editor for LNG markets Edwin Loh looks at these and other factors that could drive commodity markets this week.


Join our conversations on Twitter - use #PlattsMM and connect with us.


Related event: S&P Global Platts 4th Annual LNG & Natural Gas Markets Asia Conference

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Video Transcript


This week, Asia's appetite builds for North American crude, and the LNG market turns bullish, plus we’ll take a look at how new policies in South Korea and China might affect the thermal coal market.


But first, in oil, Asia's appetite for North American crude oil looks set to increase further this week after a recent rally in physical Dubai prices, and the release of higher-than-expected Saudi Aramco official selling prices.


China has already kicked off its US crude buying spree, with Unipec buying 16 million barrels of US crude for loading in June, the biggest volume it has ever lifted in a single month.


The strength in the Dubai market has pushed WTI prices to a steep discount to the Middle Eastern pricing benchmark, throwing the North America-Asia arbitrage window wide open.


This comes as the spread between front-month Dubai crude and the same-month WTI swap hit an almost 3-year low last Wednesday.


In LNG, Asia spot LNG summer trading is off to a strong start, with prices rising swiftly to the $9 range last week on strong end-user and short covering demand.


The Japan Korea Marker spot LNG price will start this week at a three-month high and discussions for July and especially August look strong.


So, our question this week is: How long will this summer rally last? Let us know what you think using the hashtag PlattsMM.


Also, don't forget to join us at the Platts 4th Annual LNG & Natural Gas Markets Asia Conference this Thursday and Friday.


In petrochemicals, the closely-watched East China styrene monomer spot market will start the week at a near 8-month high amid tight supply, although prices appear set to weaken as discussion crosses into June.


The recent surge in prices was due to low inventory after a reduction in deepsea cargo arrivals since March and turnarounds in China, but supply tightness is expected to start easing this week.


The thermal coal market will this week be assessing the impact of South Korea’s move to reduce the sulfur content of imports to 0.4 percent in a bid to improve air quality.


South Korea has been buying more higher sulfur US thermal coal recently and is reliant on Australian coal, where many mines cannot produce coal with a sulfur content that meets the new target.


Traders are also keeping a close watch on Beijing’s measures to cool China's coal market, which saw domestic thermal coal futures tumble last week.


Thanks for kicking off your Monday with us and have a great week ahead!





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