SINGAPORE: Demand for Asia-Pacific crude could find some support when trading for December-loading cargoes gains pace this week after Brent's premium to Dubai swaps narrowed, although the overall market outlook remained weak.
While Brent crude oil futures fell below $88 a barrel on Monday to their lowest in almost four years, weaker refining margins in Asia are likely to put a lid on demand, traders said.
"It's a very tricky market. Margins are poor, but flat prices are low," one trader said. "People may be tempted to store crude."
Some refiners could be tempted to pick up regional Brent-linked grades rather than Middle East grades, after Brent's premium to Dubai swaps narrowed on Monday for the first time in a week.
Brent-Dubai Exchange of Futures for Swaps (EFS) narrowed 56 cents to $1.37 a barrel.
A narrower Brent-Dubai spread could push more arbitrage cargoes from Africa to Asia. West African cargoes have been slow to move with differentials under pressure. In Libya, production is at least 800,000 barrels per day (bpd), an oil official and a local news website said on Sunday.
China's crude imports rose a stronger-than-expected 7.4 percent in September from a year earlier, even as demand growth in the world's largest energy consumer remains subdued, suggesting the country may be boosting its reserves, analysts said.
TENDERS
Indian Oil Corp (IOC) bought a VLCC containing Nigerian Bonny Light and Angolan Nemba crude from Shell, an industry source said. It also bought a cargo of UAE Murban crude from BP, the source said.
Thailand's PTT extended a tender to buy 600,000 to 1 million barrels of sweet crude on behalf of refiner IRPC for Dec. 1-5 arrival until Monday. The result of the tender is expected on Tuesday.
Russia's Rosneft offered three 700,000-barrel cargoes of Sokol crude loading Dec. 1-10, Dec. 16-25 and Dec. 24-Jan. 2. The tender closes Oct. 14 with bids valid until Oct. 17.
Sakhalin Energy offered 730,000 barrels of Vityaz crude loading Dec. 24-31 in a tender that closes Oct. 16 with bids valid until the following day.
MARKET NEWS
Saudi Arabia is quietly telling oil market participants that Riyadh is comfortable with markedly lower oil prices for an extended period, a sharp shift in policy that may be aimed at slowing the expansion of rival producers including those in the U.S. shale patch.
World oil prices are on the brink of sliding another $10 or more, according to chart analysts who say the over 20 percent drop since June has wiped out key support levels and left behind a "technical graveyard".
Russia is diverting more of its crude oil east with deliveries to China hitting a new record last month at the expense of Europe as geopolitical tensions between Moscow and the West dictate the latest shift in flows.
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