SINGAPORE: The Asia-Pacific crude market came under pressure on Thursday, as premiums for Russia's Sokol dropped to a more than four-year low, while Brent's premium to Dubai swaps rose to its highest in nearly 10 weeks.
Russia's Rosneft sold a prompt Sokol cargo in a tender to Vitol at about $3.50 a barrel above Dubai quotes, traders said.
The 700,000-barrel cargo is due to load Nov. 19-28. Rosneft had extended the validity of the tender from Oct. 3 to Oct. 8.
Sokol has come under pressure in recent weeks due to weak demand and strong competition from West African and Latin American producers shipping cheap crude to the region.
Brent-Dubai Exchange of Futures for Swaps (EFS), or Brent's premium to Dubai swaps, widened 33 cents to $1.78 a barrel, rising for the third straight session to its highest since Aug. 1.
Despite generally weak demand, differentials for Asia-Pacific grades - most of which are priced against the European benchmark - have found some support since the gap to Dubai quotes began to narrow in early July.
The spread has mostly hovered between $1 and $1.40 since mid-August.
"This is not good for regional grades," a trader said.
The Brent-Dubai spread could widen further if arbitrage flows of North Sea crude and other Atlantic Basin grades such as West African continue to increase, the trader added.
Cargoes of North Sea crude are currently being shipped to Asia, while U.S. East Coast refiners this week rushed to buy crude from Azerbaijan and West Africa to benefit from slumping European prices.
"The excess cargoes are starting to clear, but it will take a few months. It looks like the market is bottoming out, but it's hard to tell for sure," another trader said.
However, the overall picture was still bearish with ample supply of both crude and oil products combined with weak demand, traders said.
The December-loading programme for Australia's Northwest Shelf (NWS) condensate includes a Dec. 6-10 cargo marketed by Chevron, a Dec. 14-18 cargo marketed by BHP Billiton, while Shell will keep staff at the plant busy over Christmas as they will sell a cargo loading Dec. 22-26.
Regional condensates have been supported recently by a narrow Brent-Dubai spread, new splitters ramping up operations, and limited volumes from Qatar, a major supplier to the region.
TRADES
Inpex sold 650,000 barrels of Bayu Undan loading in November at $3.10-$3.30 a barrel below Dated Brent to Trafigura, traders said.
TENDERS
PV Oil, the marketing arm of PetroVietnam, sold 300,000 barrels of Bunga Kekwa loading Nov. 21-27 in a tender at $3.30-$3.50 a barrel above Dated Brent, traders said. The buyers were not known, and the deal could not be verified.
PV Oil also closed a tender to sell Su Tu Den crude on a term basis from January to June next year. The company is looking to sell a minimum of 200,000 barrels per month in the tender.
Term shipments of Su Tu Den could be significantly higher as PetroVietnam plans to double production of the grade to around 80,000 barrels per day towards the end of the year.
Indonesia's Petral is seeking Nigerian Qua Iboe for December-arrival in a tender that closes Friday with bids valid until Monday.
In a previous tender, Petral bought Congolese Coco from Chinaoil and Malaysian Kikeh for arrival in December.
MARKET NEWS
Vietnamese oil trading firm Petrolimex said on Thursday it has delivered the first Oman crude cargo to Sri Lanka in a term deal with refiner Ceylon Petroleum Corp (Ceypetco).
Oil tanker MV Explorer delivered 100,000 tonnes of crude from Oman to the Colombo port of Sri Lanka on Sept. 6, Petrolimex said on its website.
Iran's new development contracts will be finalised soon and presented to the cabinet for approval, its oil minister said, a sign that Tehran is pushing ahead with effort to lure foreign investors once sanctions are lifted.
Ecuador's Oil Minister Pedro Merizalde told Reuters on Wednesday that current oil prices are normal given an increase in U.S. production, and that they will be discussed at the OPEC meeting in late November.
A tanker carrying some 1 million barrels of Iraqi Kurdish crude appears to have been lightered somewhere in the Mediterranean Sea amid an ownership dispute between Iraq and the Kurdistan Regional Government (KRG) that had stopped the vessel from delivering its load, according to Reuters tracking data.
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